Total Loss Appraisal

When an insurance company determines that a vehicle is a total loss, it means that the cost of repairing the vehicle to a safe and drivable condition would be uneconomical or exceed a certain percentage (often around 70-75%) of the vehicle's pre-loss value.

1. Initial Assessment: After an accident, the insurance company will assess the extent of the damage to the vehicle. This includes both visible damage and potential hidden damage that might affect the vehicle's safety or functionality.
2. Repair Cost Estimate: The insurance company's adjuster will obtain repair estimates from trusted repair shops. These estimates consider both the cost of parts and labor required to restore the vehicle to its pre-accident condition.
3. Actual Cash Value (ACV) Determination: The ACV is the fair market value of the vehicle immediately before the accident or incident. This is often determined by considering factors such as the vehicle's age, mileage, condition, and market value. The ACV serves as a benchmark for deciding whether repairing the vehicle is economically viable.
4. Total Loss Threshold: Insurance companies have a predetermined percentage threshold of the ACV (e.g., 70-75%) beyond which they consider a vehicle to be a total loss. If the repair costs exceed this threshold, the insurance company may decide to declare the vehicle a total loss.
5. Total Loss Calculation: If the repair costs surpass the total loss threshold, the insurance company will compare the repair costs to the ACV. If the repair costs are higher than the ACV, the insurance company will typically declare the vehicle a total loss.
6. Settlement: When a vehicle is declared a total loss, the insurance company will offer a settlement to the policyholder. This settlement amount is usually the ACV minus the deductible and salvage value (if the policyholder retains the damaged vehicle). The policyholder can accept the settlement or negotiate with the insurance company if they believe the ACV assessment is inaccurate.
7. Salvage Title: If the policyholder accepts the settlement and the insurance company takes possession of the damaged vehicle, the vehicle is often issued a salvage title. This indicates that the vehicle has been declared a total loss and should be repaired before being legally driven on the road again.