How to Calculate the Total Loss Value of a Fire

The value of your home factors into total loss value.

Property damaged by fire may require various degrees of repair. A total loss is defined as property that has been damaged beyond repair or to a degree that necessary repairs approach or exceed the property value. Ideally, your insurance company steps in to provide the funds to replace your property and makes a determination of total loss value. In cases where you are not insured or want your own calculation for comparison, calculating total loss value requires knowing the market value of your property.

Instructions

1. Get an estimate for the undamaged value of your property. In some instances, this may be called an actual cash value or market value. For example, look up the blue book value for your vehicle or a recent appraisal for your home.

2. Make a list of items inside your property when the fire occurred and the value of replacing those items. Note the age or purchase date of the items as well as the brand name. Research the current price for the items and add them up.

3. Add the total value of your property to the total cost of items destroyed by the fire. This gives you the total net worth of all the property involved in the incident.

4. Hire a contractor or mechanic to provide an estimate for the repairs necessary to bring your property back to its original state prior to the fire. For example, a mechanic will review the damage to the car and provide an itemized list of costs to fix the vehicle.

5. Compare the repair estimate to the net value of your property. A high enough percentage of repairs to net value determines if you have a legitimate total loss. For example, if your property is worth $30,000 and you have $28,000 worth of damage from fire, divide 28,000 by 30,000 and multiply it by 100. In this example, 93 percent of your property value is lost to the fire. This is considered a total loss by insurance companies, since the damage is within 20 percent of the total value. Percentages below 80 percent may not qualify as a total loss.

6. Keep a copy of your estimates, evaluations and calculations together, in case you need to provide proof of your findings to auditors or insurance adjusters, who may reimburse you for expenses and losses.

References

• Auto Insurance Claim Advice: Total Loss Process Part II
• Auto Insurance Claim Advice: Car Totaled
• Allen Financial Insurance Group; Actual Cash Value vs. Replacement Costs Explained
• Insurance Providers: How do insurance companies determine a total loss after a fire?