Determining whether your car will be considered a total loss involves evaluating several factors. Generally, a vehicle is deemed a total loss when the cost to repair it exceeds a certain percentage of its actual cash value (ACV) prior to the incident—this percentage is often set by state regulations or insurance company policies, commonly ranging from 70% to 80%.
Here’s how the determination process usually works:
Assessment by an Adjuster: After you report the damage to your insurance company, an adjuster will inspect your car to estimate the repair costs and determine its pre-accident ACV.
Comparison of Repair Costs and ACV: The insurer will compare the estimated repair costs to the vehicle’s ACV. If the cost to repair your car is too close to or exceeds the predetermined threshold of the ACV, the vehicle will likely be declared a total loss.
Consideration of Salvage Value: Sometimes, the total loss threshold might include factoring in the salvage value—what the car is worth if sold for parts or scrap.
State and Insurance Company Policies: Be aware of specific state regulations and your insurance company’s criteria for declaring a total loss. Some states mandate specific thresholds or offer more consumer protection regarding how total losses are determined.
Settlement Offer: If your car is declared a total loss, the insurance company will typically compensate you based on its ACV before the accident, minus any deductible, and possibly subtract the amount that could be obtained from selling the vehicle for salvage.
Understanding these steps can help you prepare for the process and better discuss the situation with your insurance adjuster. If you disagree with the assessment, you may challenge the decision by providing additional information or getting an independent appraisal.
