Friday, 07 May 2021 12:04

What Does it Mean to ‘Total’ a Vehicle?

Written by Gary Wickert, Claims Journal


...an auto insurance policy under Part D---Coverage For Damage To Your Auto, might read as follows:


Our limit of liability for loss will be the lesser of the:


  1. Actual cash value of the stolen or damaged property;
  2. Amount necessary to repair or replace the property with other of like kind and quality; or
  3. Amount stated in the Declarations of this policy.


Another example of policy language regarding total losses is as follows:


We will pay the cost to physically repair the auto or any of its parts up to the actual cash value of the auto or any of its parts at the time of the collision. The most we will pay will be either the actual cash value of the auto or the cost to physically repair the auto, whichever is less. We will, at our option, repair the auto, repair or replace any of its parts, or declare the auto a total loss. If, the repair of a damaged part will impair the operational safety of the auto, we will replace the part.


Therefore, the policy language of a typical policy will usually allow the insurer to consider a vehicle to be a “total loss” if:


  1. The damage to the vehicle is so severe that it can’t be repaired safely;
  2. The repairs will exceed the value of the vehicle itself, or
  3. The amount of damage is so severe that state regulations require the vehicle to be declared a total loss.


The insurance company will then pay its insured the ACV of the vehicle, plus applicable state fees and taxes, if provided for in the policy language, less any deductible owed.


A chart entitled “Recovery of Sales Tax After Vehicle Total Loss In All 50 States” can be found here.


The policy language usually dictates what is owed. If the vehicle is owned free and clear, the payment is made to...