Have you ever heard someone say his or her car was “totaled”? That’s the more common way of saying that they experienced total vehicle loss. Total vehicle loss occurs when a car is damaged beyond repair, so that any attempt to restore it to use would cost more than replacing it entirely.
When is a damaged car considered a total loss?
There are many factors that play into the total vehicle loss calculation but they all are focused on the same ultimate determination. Would it cost more to repair the vehicle than it would cost to replace the vehicle?
Total Loss Claims and Actual Cash Value
The replacement cost of a vehicle is often referred to as the Actual Cash Value of your car. Your car in its current condition (before the accident), with consideration of the make, model and year it was produced has an accepted base value. That base value is then offset by your insurance deductible amount and any other relevant factors that would reduce its value (preexisting damage, excessive mileage, etc) to determine your actual cash value.
How does the claim adjuster decide how much my car is worth?
Often determined by its blue book value and other similar methods of arbitraging a standard valuation for the vehicle, your insurance adjuster has the experience and tools needed to establish a fair market value for the car if you had tried to sell it a moment before the accident.
What Happens After a Total Loss?
Once the actual cash value is established, it becomes a simple calculation to determine if that value is greater or less than the cost of having the car repaired. If the cost of repair is lower, the insurance company pays for the repairs. If the cost of repair is higher, the insurance company will consider the vehicle a total loss and will pay you the actual cash value of the vehicle instead.
Will the insurance company buy me a new car?
The insurance company will not purchase a new car for you. Even if your have an almost new car, it has already depreciated in value considerably from the moment you brought it home the first time from a dealership. Your car is not worth as much as a new un-owned car of the exact same make and model. For that reason, if your car is subject to total loss, the car insurance company will pay you the actual cash value of the vehicle instead as compensation.