If you’ve ever gotten into an accident in an older vehicle, you may be aware of the concept of Total Loss. If you have a new car, you may not experience Total Loss anytime soon. However, if you’re ever in a situation in which this occurrence affects your auto insurance, you need to be prepared.
 

What is it?

A vehicle may be considered a Total Loss after experiencing serious damage. When the cost of repairing the car is higher than the actual cash value of the vehicle, it is decided a Total Loss. Actual cash value refers to the value of the vehicle with its age and natural wear and tear in mind. Getting coverage for vehicles that are a Total Loss is different than a traditional car insurance policy.

 

When is a Total Loss car covered?

In order to receive coverage on a Total Loss vehicle, you’ll need to have either property damage liability, collision, or comprehensive insurance. There’s a good chance you already have PD, as it is mandatory in every state other than New Hampshire and Virginia. In order to file a claim through your PD, the other driver would have had to be at fault after an accident for you to receive a payout. However, if you file a claim on a Total Loss vehicle with your collision insurance, it doesn’t make a difference if you were the negligent driver or not.

 

Is it a Total Loss or not?

Once you file the claim, an adjuster will inspect your vehicle, determining the damages and the estimated costs. At this point, your car may be declared a Total Loss. The state in which you live determines whether or not the vehicle is a Total Loss. Some states, such as Colorado, New York, and Texas, determine the damage by a Total Loss Threshold, where the damage is calculated as a percentage of the car’s actual cash value. Other states, including Georgia and Pennsylvania, use a Total Loss Formula; in this situation, if the sum of the repair costs and the estimated resale value is higher than the car’s actual cash value.

 

What if your car is declared a Total Loss?

After your car is declared a Total Loss, your insurance company will take your car and alert the DMV that your car has been totaled. If you’d like, you may ask your insurance company if you can keep the vehicle if it’s a vintage vehicle worth collecting or if you’d like to sell the parts, but you’ll receive less payment in this instance. According to Geico, not all states allow the automobile owner to keep the towed vehicle, so it’s best to look into the steps you would need to take to see if it’s worth jumping through any hoops.

 

What if you don’t believe it is a Total Loss?

If you disagree with the insurance adjuster’s decision on your vehicle, you have the right to negotiate the car’s worth. To do this, you will need to submit documentation supporting the notion that your car is worth more than the adjuster is suggesting. In particular, modifications you have made to your vehicle are the main cause of a negotiation with an adjuster. After this conversation, if you still feel shorted, you may want to take legal action. However, paying for a lawyer and going through this process is only worth it if you believe the estimation is much lower than what you believe it should be.


If your vehicle is declared a Total Loss, don’t panic. Although this process requires a few extra steps than filing a claim on most types of vehicles, it’s crucial if you want to receive cash in the amount of your ACV. As a customer of your insurance company, you have the right to push back on your insurer’s estimates, within reason. If you feel that your insurer isn’t giving you a fair estimate, after you file this claim, consider shopping for insurance quotes that cater to your lifestyle and vehicle make.