Expert: Ron Cercone - 2/6/2009

Question
What constitutes a Total Loss on a vehicle? Is there a certain percentage of the value of the care where an insurance company is required to deem the car a Total loss or can they always force you to have it repaired? Or is it the type of damage that determines it, like frame damage for example? Does it differ from State to State? This occurred in Oregon.

Answer
Jim,

The rule of thumb is the same everywhere. If the cost of repair is more than 80% of the value of the car less the salvage value, then it is a total loss, for insurance and legal purposes. Sentimental value has no value here. And you can still repair the car if you want to kick in the extra dollars.

So if it costs 1000.00 to fix a car and the car was worth 2000.00 before the accident and the value of the salvage is $400.00, then the insurer would pay $1600.00 if it was totaled. But since it only costs 1000.00 to fix it, then thats all they will pay in this case.

Now here is where the 80% comes in. Most insurers will add 20% to the repair cost to allow for possible supplemental payments due to "hidden" damage (Unless a repair shop wants to guarantee that it will not bill the insurer for any more than its original estimate, or the car owner agrees to pay for any supplemental damage).

Or, the insurer will deduct 20% from the cars value and then deduct the salvage value. If that figure is less than the repair cost, then it is a total loss, from the insurers perspective.

Now they can't necessarily take the car away. If you match their salvage bid, then you keep the car. For the best information on maximizing a total loss vehicle claim and all the other side issues, salvage, rental car, title, CCC, ADP, go to www.UClaim.com, the Products page and down to the Automobile section.