How Does an Insurance Company Determine If a Car Is Totaled?

An insurance company considers a car totaled when it's not cost-effective or economical to repair the car. To arrive at this conclusion, an insurance company must comply with state requirements, and utilize its own company guidelines.

Considerations

When the cost to repair a car exceeds the fair market value, an insurance company considers the car a total loss or totaled. The company factors in all expenses associated with the repair of the car, such as rental car expenses.

Comparison

Insurance companies sometimes look at certain repairs and compare them as a percentage to the fair market value of the car. As a rule of thumb, insurance companies use a percent in the range of 51 to 80, unless there are state guidelines and regulations in place that dictate otherwise.

Determine Value

Comparing a car to similar cars at dealerships and reviewing recent sales determines the value of a car.

Safety

A car is sometimes deemed a total loss if repairs can't restore it to its condition prior to the accident in a safe manner. Sometimes, the physical state of the car won't allow this to happen.

No Repair

When a car is a total loss, the insurance company won't repair it, but, instead, it issues a check to the customer and/or lien holder.

Challenge Findings

When an insurance company determines that a car is a total loss, you can challenge its findings. You'll need to submit proper documentation to support your claim. With enough proof and evidence, the insurance company may amend or change its offer.

References

• Progressive: Total Loss
• CarInsurance.com: Classifying a Total Loss