The Alberta Insurance Act allows an automobile Insurer, after a total loss, to subtract the policy deductible from the actual cash value of the automobile paid to the Insured and then take title to the salvage

Pauli v. Ace Ina Insurance Co., [2004] A.J. No. 185, Alberta Court of Appeal

At trial, the Court held that the Alberta Insurance Act, R.S.A. 2000, c. I-3, allowed an automobile insurer to charge a deductible against the actual cash value of the vehicle in a total loss situation and keep the salvage.

The Court of Appeal upheld this decision.

Statutory Condition 4(7) provides that if the insurer “pays the actual cash value of the automobile, the salvage, if any, shall vest in the insurer.” Section 614(1)(b) of the Insurance Act provides that “no variation or omission of or addition to a statutory condition is binding on the insured.” However, the introductory language of s.614(1) indicates that its provisions are “subject to [section]…638(2)”, which permits deductibles and provides that an insurance contract “may contain a clause to the effect that, in the event of a loss, the insurer is required to pay only[…] the amount of the loss after deduction of a sum specified in the policy.” In light of these provisions, the Court held that the legislature clearly intended an insurer to be entitled to take title to the salvage when it had paid the maximum amount for which it was liable under the contract of insurance – the actual cash value less the policy deductible. There was no ambiguity in the terms of the contract.

The appeal was therefore dismissed.

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