Understanding Total Loss Claims

Learn the basics of total loss claims and how to handle them effectively.

10 Jan 2025

When a vehicle is deemed a total loss, it means the cost of repairs exceeds its market value. This often happens after major accidents, natural disasters, or theft recovery situations where the vehicle sustains significant damage.

Understanding the process begins with your insurance policy. Most policies provide coverage for total loss claims under comprehensive or collision coverage. Once a claim is filed, your insurer will assess the vehicle's damage and calculate its Actual Cash Value (ACV), which reflects the market value of the car before the incident.

The ACV is influenced by factors such as the car’s age, mileage, condition, and resale value. If you disagree with the insurer’s valuation, you have the right to negotiate or provide evidence like maintenance records or receipts for upgrades to justify a higher payout.

Once the payout is finalized, you’ll need to decide whether to use the settlement amount to purchase a new vehicle or pay off any remaining loans on the totaled car. In some cases, you may have the option to retain the damaged vehicle, though this could impact the payout amount.

It’s crucial to stay informed throughout the process, ask questions when unclear, and ensure you receive a fair settlement for your loss. Preparing documentation and keeping detailed records of the vehicle's value will greatly help in expediting the claim process.