How Do Insurance Companies Define a Total Auto Loss?

By Rissa Watkins

  • Overview

    How Do Insurance Companies Define a Total Auto Loss?
    How Do Insurance Companies Define a Total Auto Loss?
    Insurance companies call a claim a total loss if it costs more to repair your car than to replace it. Insurance companies will use many resources such as the Kelly Blue Book value and local car sales prices to decide how much your car is worth. If they find the cost to repair the vehicle is more than the car is worth, they will call the claim a total loss and pay for the value of the vehicle.
  • Facts

    It is up to the insurance company to decide if they want to write off the vehicle as a total loss. You can't force the insurance company to repair your car. They will choose whichever costs them less money.
  • Options

    You can ask to buy back the vehicle as salvage from the insurance company. If you do this, they will pay you for the value of the vehicle. You then buy it back from the insurance company at a very low price and repair it yourself. You will have to get a salvage title, but you can save a lot of money and don't have to worry about buying a new car.


  • Warning

    For cars over six years old, sometimes a simple cracked windshield is enough for the insurance company to total the vehicle. Track the value of your car as it gets older and remove the comprehensive and collision coverage from it when it isn't worth very much. Your insurance agent won't tell you this automatically, you need to protect yourself.
  • Tip

    If you remove the comprehensive and collision coverage, put the money you would have spent into a savings account to pay for repairs or replacement when the time comes. When you are trying to decide if it is worth having the coverage, don't forget to back out the amount of the deductible. If the car is worth $1500 and you have a $1000 deductible, drop the coverage because you will only get a check for $500 in the event of a total loss.
  • Expert Insight

    Most companies will start the repair process when you file your claim. The claims agent will try to set up a repair when you call it in to them. When the claims agent is entering your claim, the computer usually will flag the agent to tell them that it might be a total loss. Once this happens, they will not try to set up any repairs at that time. If you are talking to an after-hours agent, they might not be able to tell you that it could be a total loss if they aren't licensed. Keep that in mind if your insurance company does not set up repairs for your vehicle.
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