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Consider this: You’re involved in an accident. You take the necessary steps and report the accident to your insurance company; so, now what? The next step would be determining the cost to repair the damage, and then the value of your vehicle. When the cost of repairs and the value have been identified, the next decision needs to be made by your insurance company — and that’s whether to repair your vehicle or determine it to be a total loss.
What is considered a total loss on a vehicle?
Deeming a vehicle a “total loss” means that the cost to repair the vehicle would be more than the ACV. However, there are other factors that go into this decision, which can make the situation a bit more complicated:
Factor #1
The first factor is the insurance company. Insurance companies establish standards for what they consider a total loss. The source they use to determine the vehicle’s ACV (Like Kelley Blue Book®, Edmunds® or NADA®) can make a difference in when a vehicle is considered a total loss.
Factor #2
The second factor would be whether it’s economically feasible to repair the vehicle. Adjusters will compare the cost of repairs to the actual cost of the vehicle (known as the total loss ratio). They will also consider if the vehicle can be repaired and made safe.
Factor #3
The third factor would be the state you reside in. Insurance companies are required to follow all applicable state laws when it comes to the total loss of a vehicle, and different states set different rules for when a car can or must be deemed a “total loss.” In a few states, this means that the total loss ratio of the vehicle has met a set threshold. Whereas in other states, insurers will render a vehicle a total loss if the ACV less its estimated salvage value is less than the cost of repairs.
For some people, repairing their vehicle is more advantageous. For others, they prefer to have their vehicle totaled. If you feel strongly one way or the other, talk to your claims adjuster and explain your position. He or she may not have a choice in the matter, but an open line of communication is the first step to getting you back on the road safely. If the adjuster has a choice, your preference will be given consideration.
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