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The term "total loss" is used in the auto insurance industry to describe a car that would cost more to repair than the value of the car itself. When an insurance company that your car, truck, SUV, van or other vehicle is a total loss, you have the choice to accept the insurance company's check to you for the value of your car or to dispute the valuation of the car and have the total loss determined by an arbitrator.

How Insurance Companies Determine Total Loss

Following an accident, your insurance company will initially assign an insurance adjuster to your claim. The adjuster will inspect your wrecked auto and determine the extent of the damage. The adjuster will also use a formula that is established by each insurance company to determine whether the insurer should pay to repair the vehicle of if the cost of repairs would exceed the threshold that the company has set. Many insurers will consider the vehicle to be a total loss if the cost of repairing the vehicle and providing you with a rental car for the time period that the vehicle is being repaired exceeds fifty-one percent of the actual cash value of the vehicle. Other companies will call the vehicle a total loss if this percentage is eighty percent or greater.

Even though a car may still be drivable, if the actual cash value of the vehicle is already low due to vehicle age or condition, the insurance company may prefer to total the car out and pay you the cash value of the car in lieu of paying for repairs. Typically, insurance companies use the so-called "blue book" value of the vehicle in determining cash value.

Arbitration to Dispute Total Loss

If you do not agree with the declaration of your vehicle being a total loss, you may have the right to arbitration. Check with your policy to determine if you have that right, or ask your agent. Not all policies provide a provision for arbitration. If it does, you can hire an independent arbitrator to examine your vehicle and make an estimate as to the cost of repairing the vehicle. If the insurance adjuster's valuation of the vehicle (and thus the payment you will receive) is less than you think it should be, or if your vehicle has sentimental value, then arbitration may be your best option.

A good way to know if you are getting a fair shake from the insurance company is to look up the value of your vehicle online. There are several online authorities on the matter of blue book value, and it does not cost to look up the information.

Settling Up

Once your vehicle has been declared a total loss, most people just accept the settlement check for the value of their vehicles. The settlement check typically includes the cost of registering and titling a vehicle that values at the same costs as your wrecked auto. The insurance company will keep your wrecked auto and sell it off to recoup some of the money that they paid out to you. Most "totaled" vehicles end up being sold to salvage or junkyards as scrap.

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Related Questions

What is Borderline total loss?

A total loss is when the cost of repairing the vehicle exceeds a pre-determined percentage of the vehicle's value. For example, if your vehicle is worth $10,000 and the damage exceeds $7,000, your vehicle may be considered a total loss (depending on the state and your insurance company's policy). A borderline total loss would be (in the same example) if the damage to your vehicle is close to, but not quite $7,000.


What are the total loss storage charges for the vehicle?

The total loss storage charges for the vehicle refer to the fees incurred for storing a vehicle that has been deemed a total loss by the insurance company. These charges typically include daily storage fees until the vehicle is removed from the storage facility.


How do you determine if a vehicle is totaled?

If the repairs of the vehicle exceed the value of the vehicle, then the vehicle is declared total loss.


Should I buy a vehicle that has been deemed a total loss in its vehicle history report?

No!


Is there a specific NY Law concerning the compensation for a total loss auto insurance claim if the vehicle was purchased within the past 90 days?

If it is a total loss then the insurance needs to pay the value of the vehicle.


Why do you have to sell your vehicle to the insurance company if it is declared a total loss in the state of Alabama?

no


If your car is declared a total loss how much will the insurance company pay back to you if the car was purchased below book value?

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What is the criteria to declare a damaged car a total loss?

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What does loss payee mean on a auto insurance policy?

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When is a vehicle a total loss?

Basically when repairing it is more than the cost of the current value of the car.


How do they determine the amount to pay for a total loss vehicle with a prior salvage title?

Typically the value is 20% of the vehicle's value without salvage.


What formula is used to determine if a vehicle is a total loss in Texas?

If the cost to repair is more than the vehicle is worth to replace then it is considered totaled.