If your car gets into an accident, it is usually very stressful for you, especially if an insurance company deems it a complete loss. Therefore, knowing how the insurance company determines the value of your car is very important in these circumstances. This is where total loss appraisals come into the picture. It helps determine the actual cash value of your vehicle and ensures you receive a fair settlement. Many vehicle owners, however, often lack clarity on how this process operates or what their rights are. This guide will clarify what total loss appraisal is, how it functions, and why it is important for you.
What is a Total Loss Appraisal?
A Total Loss Appraisal from an insurance perspective is the process used to determine if the cost to repair a damaged vehicle is higher than the vehicle’s Actual Cash Value (ACV) at the time of claim. If the amount needed for repairs is equal to or greater than the value of those repairs on the vehicle's current market value then the Insurance Company will determine the vehicle as being Total Loss for Insurance purposes. Total Loss occurs when an insurance company's cost to repair exceeds a % of the value of the vehicle (typically between 70 – 80% depending on the insurance company's guidelines).
Types of Car Total Loss
There are two types of total loss: actual total loss and constructive total loss.
Actual Total Loss
"Actual total loss" refers to a condition when your property, for instance, a car, is completely destroyed, stolen and not recovered, or damaged beyond repair.
Constructive Total Loss
Constructive total loss occurs when your item is repairable, but the cost of those repairs plus salvage costs would exceed its pre-accident value.
Key Aspects of Total Loss Appraisal You Should Know
Here are a few things that you must know about a total loss appraisal.
Actual Cash Value (ACV)
It’s the car’s value right before its accident. The car’s depreciation, age, and mileage influence ACV.
Repair Thresholds
The repair threshold is the specific percentage of the ACV (actual cash value). After exceeding it, the vehicle is declared a total loss.
Settlement Options
When the appraisal process is completed and the total loss is determined, the insurer will generally present a settlement based on the value before the loss, minus any deductibles.
Standard Payout
If you choose a standard payout, the insurer takes the salvage and pays you the full appraisal value.
Owner Retention
If you decide to keep your vehicle after it’s declared a total loss, the insurer deducts the salvage value from your total settlement amount.
Total Loss Appraisal Support for Car Owners
Total loss appraisal helps you get a fair settlement amount after your vehicle is damaged in an accident and declared a total loss. If you need this appraisal, we can help you with the task. We are ADR-Claims, a team of skilled and experienced auto appraisers. We will assess your vehicle in great detail so that we can accurately ascertain the actual pre-accident value of your vehicle.
Then we will provide you with a documented appraisal (market values of vehicles like yours) to help you when discussing values with the insurance company in order to attain a fair settlement. We may also assist you if you would like help with negotiating the settlement. Contact us to book your appraisal service and let us help you.
