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How does the insurance company determine a car is a total loss after an accident?

How a car is determined to be a total loss by an insurance company's claim adjuster after an accident varies according to state laws and insurance companies' guidelines. In general however if the car is not economical for the insurance company to repair it is deemed a total loss.

Repair costs are not the only thing taken into account when determining if your vehicle will be declared a total loss or not. The insurance company can also take into account the amount it will cost for storage fees, a rental car while the car is being repaired, etc. An insurance adjuster takes all of this into their calculations when deciding if a car should be repaired or deemed a total loss.

If the repairs costs come to or exceed the value of the car then the adjuster will find the car to be totaled out since an insurance company is not going to pay more than the car is worth for it to be repaired.

If the state where the accident occurred has in law that repairs costing a certain percentage of the car's worth causes the vehicle to be declared a total loss then the insurance company will follow this. If the state does not have an amount stated in law that the insurance companies must follow then it is left up to the discretion of the insurance company to decide what percent of the car's actual cash value (ACV) makes a car totaled.

Without a specific state law as a guideline most insurance companies will determine a vehicle to be a total loss when it is between 51 to 80 percent of its actual worth or basically when the repairs costs are more than the value of the vehicle. Also remember they will use the cost of repairs, storage fees, rental car costs, etc to see if it is uneconomical to repair a car. If they find it is uneconomical the adjuster will declare a car to be totaled.

A vehicle's value is determined by comparing your vehicle's condition to similar vehicles. This may include input from local auto dealers, private parties or recent sales which the adjusters use in their valuation. Condition, equipment and mileage differences are also taken into consideration.

So how an insurance adjuster comes to the determination that a vehicle is a total loss depends upon both state laws and then the insurance company's own internal guidelines. To find out if your state has any guidelines regarding when a car should be determined to be a total loss contact your state's insurance regulator.

If they do not have regulations regarding this and it is left up to the individual insurance carrier then ask your insurance agent what your company's guidelines are. If you are in the middle of a third party claim then you can discuss with the insurance adjuster for the insurance company working your claim what their guidelines are for totaling out a vehicle.


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