What is a total loss?

In regards to a claim for property damage, a total loss is when the item is simply not worth repairing.  Normally, this occurs when the value of the repair is roughly 70% of the value of the item.  So, if your car is worth $10K and the repairs are $7K or more, then the vehicle is a total loss.

So what’s this mean? This means that now the defendant or insurance company owes you the fair market value of the property (usually an automobile).  There are different ways of calculating this value.  Most people think their vehicles are worth more than what they are truly worth.  Be honest with yourself when thinking about the value of your vehicle.  Those cigarette burns on the seats may not seem  like much to you, but they certainly are a big deal to anyone else looking at your vehicle.

Now, there’s one other point that I want to make here. ” Total loss” does not always mean “Take your vehicle”.  Even if your vehicle is a total loss, it’s still your property, so if you want to keep your vehicle, just tell the defendant or the insurance company that you wish to keep your vehicle.  They cannot take your vehicle just because they want to.  This is not a “forced sale”. What they do is once they have calculated the fair market value of your vehicle, they then subtract what the salvage is worth and there is your value.  So, if your vehicle was worth $10K and they could get $2K at auction for the salvage, then you get $8K and keep your vehicle.  Just make sure that your vehicle is not sitting at some wrecker yard, racking up storage charges.

This entry was posted on June 27, 2008 at 7:36 am and is filed under Insurance Practices, Insurance Law. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.