OPCF 43 – Replacement Cost Endorsement – Waiver of Depreciation

The OPCF 43 endorsement, also known as vehicle replacement cost insurance, aims to provide superior insurance coverage for an originally owned, new car.  

If you carry the OPCF 43/43A endorsement on your auto insurance policy, your claim settlement will be based on replacement cost if your vehicle is written off.  Without the OPCF 43, your auto claim settlement will be based on actual cash value. This means that depreciation will be deducted from your settlement and your cash settlement will be less, creating a shortfall between the claim settlement and what is owed to the financing or leasing company. 

What does the replacement cost of a vehicle mean?

Replacement cost simply means that depreciation will not be factored into the claim settlement of your vehicle. It applies only to a total loss scenario. 

How do you qualify for the OPCF 43?

To qualify for OPCF 43/Replacement cost auto insurance, the following conditions need to be met:

1. You must be the original purchaser and the automobile must be new at the time of delivery; and 
2. The loss or damage must occur before the expiry date of this policy which is in force within 36 months following the number of months from when your automobile was delivered to you.  The period of coverage can vary depending on the insurance purchased or offered but typically is 3 years, from the time of delivery. 

What’s the difference between the OPCF 43 and the OPCF 43A?

The only difference is that the OPCF 43A is for leased vehicles, while the OPCF 43 is for owned vehicles. 

Does insurance replacement value include tax?

Yes, replacement cost value includes tax, unless the vehicle is commercially registered. If the vehicle is commercially registered tax is not offered in the settlement.   

Is replacement cost better than actual cash value?

Yes, replacement cost is better than actual cash value because it does not factor depreciation into the settlement value. 

What is an example of a replacement cost?

Here is an example of replacement cost coverage: 

Your 2021 Honda Accord is written off in an auto insurance claim. The insurance company offers the latest vehicle model or the equivalent value as a settlement. 

What is the difference between market value and replacement value?

The difference between market value and replacement lies in how deprecation is factored in. Market value considers depreciation; replacement cost does not. 

What is the difference between Agreed value vs Replacement cost?

The difference between the Agreed Value and Replacement Cost is how the loss settlement is calculated. 

Agreed Value, auto insurance is based on a specified dollar amount as compensation for an insured loss. In Ontario, an auto policy endorsed for Agreed Value has the OPCF 19A (not to be confused with the OPCF19) attached to it. The endorsement specifically states the amount to be paid in a total loss. 

Replacement Cost is defined as the cost to replace the vehicle, not including depreciation.

How do you calculate the replacement cost on a vehicle with the OPCF 43 or OPCF 43a endorsement?

The OPCF 43/43A is calculated by offering the lowest of the following amounts:

1. The actual purchase price of the automobile and its equipment
2. The manufacturer’s suggested list price of the automobile and its equipment on the original date of purchase, or 
3. The cost of replacing the automobile with a new automobile of the same make and model, similarly equipped.

What is the replacement cost is lower than the market value of the vehicle?

Sometimes the market value of a vehicle is greater than its replacement cost.  Due to the forces of supply and demand, the used vehicle market can be inflated and consequently increase the vehicle’s fair market value. The insurance company should be paying the higher amount, however, there is controversy surrounding this subject. 

Does replacement cost apply to vehicle repairs?

There is confusion surrounding the topic of whether the OPCF 43 endorsement covers OEM (original manufactured parts) parts for vehicle repairs. The OPCF 43 (replacement cost) does not apply to vehicle repairs. Replacement cost applies only when the vehicle has been deemed a total loss or written off. 

What does the OPCF 43 not cover?

The OPCF 43 does not cover the following:

1. Tires, 
2. Batteries, or 
3. Betterment of the automobile resulting from repairing or replacing parts for prior unrepaired damage
4. Warranty
5. Admin Fees
6. Luxury Tax
7. Cash Incentives
8. Freight Charges

Do I need replacement cost insurance coverage on a new leased vehicle?

Yes, replacement cost insurance coverage is as important on a leased vehicle as any other new vehicle. Although you’re technically not the owner of a leased vehicle, this does not mean you won’t be responsible for the replacement value should the car be written off.