Total loss is a situation where the cost of repairing the vehicle, plus its salvage value, plus rental reimbursement expense during repair equals or exceeds its actual cash value; it is not economically feasible to repair. If the cost of repairing the damaged vehicle is 51% of its total cost than some of the companies consider it a total loss. However mostly 80% is considered as a total loss situation.
When a car accident happens the insurance companies can follow one of the two ways which will depend on the evaluation of the damage of the vehicle and compare the cash value of the car with the repair cost. After this, the insurance companies will either pay the cost of repair or will declare it total loss if the cost of repair is more than the market value of the car. If cost required to bring the car to its pre-accident situation is more than the its market value cost then the insurance companies will declare it a total loss and will not pay for it but if the repairing cost is much less than the company will pay out the cost.
The insurance companies follow various steps to find out whether the claim has to be paid out or the car is a total loss. After the accident, when the owner asks for the claim, the adjuster investigates the car. The owner has to hand over the car to the adjuster who investigates the various components of the car. Various parameters of the car are taken into consideration. The important parameter is mileage. If the car is new and with fewer kilometers on the road it means that the cost value of the car will be higher. The company will also consider various accessories of the car. The adjuster finds the cash value of the car and reports to the adequate authority. The car is then sold to the salvage buyers which could yield a profit to the companies over the value they would have to pay for a totaled car.
CarInsurance.com advices you to purchase a separate GAP insurance policy while purchasing insurance on a new vehicle. Along with it, with many companies you can add Loan/Lease (GAP) coverage to your Car Insurance policy.
An insurance company may use a number of different sources to determine what they feel your vehicle is worth, but the law states they must calculate the value based on actual vehicles found in the market place within a reasonable distance from your home. Click this link for your total loss calculator.
A totaled car would not be a good experience for the owner but by having proper insurance and adequate negotiations you can overcome the loss suffered by you.
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