SEF 43 After Hail: Waiver of Depreciation

SEF 43R is an Alberta endorsement that stops your insurer deducting depreciation on a covered loss. If hail writes off a newer car and you qualify, the insurer pays the lesser of what you actually paid (taxes included) and the manufacturer's suggested retail price (taxes included), instead of the car's depreciated value. You qualify only as the original purchaser, and only within a number of months from delivery that is set on your policy.

The short answer: what SEF 43R changes after hail

Start with what happens without it. Under Alberta's statutory conditions, an insurer owes no more than the actual cash value of the car at the time of the loss, with a deduction for depreciation. On a newer car, that deduction is, in effect, the drop in value between the day you bought it and the day the hail hit.

With SEF 43R (the standard 01/2022 form approved by Alberta's Superintendent of Insurance), when the covered loss meets the conditions on your policy:

• The depreciation deduction is waived. The insurer does not take depreciation off the covered loss.
• On a total loss, the payout basis changes. The insurer pays the lesser of the actual purchase price, taxes included, and the manufacturer's suggested retail price at the original purchase date, taxes included.
• On a total loss, the insurer also gives up its option to repair or replace instead of paying. Normally it can choose that route if it gives written notice within 7 days of receiving your proof of loss.

What it does not do: pay off a loan, cover tires or batteries, or apply to a car you bought used. Those limits are below, and they are where most surprises come from.

Who qualifies: three conditions on the form

The Alberta SEF 43R form sets out the conditions. In plain terms:

1. You are the original purchaser. The selling dealer is not counted, so buying the car new from a dealer still makes you the original purchaser. If you bought it used from anyone else, you are not, and this condition is not met as written.
2. The loss happens within the set number of months. The form counts from the car's first delivery, and the number of months is left blank on the standard form. It is filled in on your policy. Find that number before you assume anything.
3. Some things are excluded. Tires and batteries are left out, and so is betterment on parts that already had damage nobody repaired.

That third point matters for hail cars more than people expect. If an earlier storm dented the car and you never fixed it, the waiver does not cover the improvement from replacing those already-damaged parts. Old dents you drove around with can come back to bite.

If you meet all three, the next question is what the cheque actually looks like.

How the payout works on a hail total loss

"The lesser of purchase price and sticker price" sounds dry. It plays out in two ways:

• You paid over sticker. If you paid more than the manufacturer's suggested retail price, the payout uses the sticker figure, taxes included.
• You paid under sticker. If you negotiated below it, the payout uses what you actually paid, taxes included.

Either way, the figure is tied to the day you bought the car, not the day the hail hit. That is the whole point: depreciation is the gap between those two days, and the endorsement is what waives it.

Keep your bill of sale. Because the payout can rest on your actual purchase price, that document is your evidence. If the insurer has a different figure on file, the bill of sale is what you show them.

Everything else about the claim still runs on Alberta's normal clocks. You deliver a proof of loss within 90 days of the storm, and the insurer has 60 days after receiving it to pay. How the rest of a total-loss payout works is covered in our post on written-off car payouts in Alberta.

SEF 43R is not gap insurance

This is the most common mix-up, so it gets its own section.

SEF 43R decides how the car is valued. Gap coverage looks at what you owe. They can overlap, but they are not the same thing.

If you financed exactly the price of the car, a payout based on that price may come close to your balance. If you financed more than the car (add-ons, fees, or a balance rolled over from your last vehicle), you can still owe more than SEF 43R pays. That leftover is the gap, and only gap coverage, if you bought it, is aimed at it. Our post on gap insurance after a hail write-off covers where to look for it.

So if you have both, good. If you have only one, know which problem it solves.

On a repair, it usually matters less

SEF 43R does its heaviest lifting on a total loss. When the car is repaired instead, the waiver applies to the depreciation that would otherwise be taken off the covered loss, with tires and batteries still excluded.

On a hail repair done paintlessly, the panels you already have are worked back into shape rather than replaced. There may be very little to depreciate in the first place. That is a reason not to let the endorsement drive your repair decision. The repair estimate decides whether the car is fixed or written off; the endorsement decides how a write-off is valued.

Which means the first step is still finding out whether you have it.

How to check if your policy has SEF 43R

You can usually answer this in one call:

• Look at your policy documents. Endorsements are generally listed by number. Look for "SEF 43R", "43R" or "waiver of depreciation".
• Find the month count. It is set on your policy, not on the standard form.
• Ask your broker four questions: Do I have SEF 43R? How many months from delivery? Am I listed as the original purchaser? What purchase price do you have on file?

If hail has just hit, do this before the adjuster calls with a number. Knowing whether depreciation is on the table changes how you read any offer. The basics of hail coverage itself are in our guide to whether insurance covers hail damage in Alberta.

Once you know you have it, the order of the claim does not change much.

If hail just hit and you have SEF 43R

The endorsement changes the value. It does not change the rules of the claim. Work through it in this order:

1. Give written notice promptly. Alberta's statutory conditions say "promptly", with no number of days, so do not treat it as a grace period.
2. Protect the car from further damage. Cover broken glass. That cost is the insurer's.
3. Hold off on dent repairs. No repairs beyond protective ones until the insurer has had a reasonable chance to inspect, or agrees in writing.
4. Ask the insurer to confirm in writing that SEF 43R applies to this loss, and which purchase price it will use.
5. Deliver your proof of loss within 90 days of the storm, with a copy of your bill of sale.

If a write-off is being discussed, step 4 is the one that changes the number.

Your next step: know the repair number too

The endorsement tells you what a write-off would pay. A repair estimate tells you whether it should be a write-off at all. You want both before you agree to anything.

Book a free 30-minute scan at the shop, Unit 5, 5915 40 St SE, Calgary, or send a few photos taken at a low angle with light running across the panels. You will have a panel-by-panel picture of the damage to set beside the insurer's figures.