What Counts As a Total Loss When Filing a Car Insurance Claim?


Quick Answer

The term "total loss" is an insurance industry reference to a vehicle that's cost of repair exceeds its actual cash value, according to DMV.org. This means that it would cost more to repair the vehicle to its original state before the loss occurred than it would to buy another vehicle of the same model, year and condition.

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Full Answer

Several factors go into the determination of whether a vehicle is a total loss after an accident, notes DMV.org. These include the particular car insurance company, the vehicle's condition and individual state laws and regulations. Car insurance companies are required to follow specific laws when declaring a vehicle a total loss, but they also have their own unique ways of determining the loss value. Adjusters look mainly at whether or not the vehicle can be repaired safely and whether or not the cost of repairing the vehicle is more than the vehicle itself is worth. In most states, the vehicle must suffer a specific portion or percentage of damage to be declared a total loss.

After the vehicle is declared a total loss, the owner of the vehicle and/or the lien holder receive the actual cash value of the vehicle. Owners usually surrender the vehicle's title and keys prior to receiving compensation for a total loss.

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