Friday, 07 May 2021 12:04

What Does it Mean to ‘Total’ a Vehicle?

Written by Gary Wickert, Claims Journal


...they declare a vehicle a total loss as opposed to paying to repair it. A “total loss” is not automatically considered salvage. Every state has its own title-branding laws and requirements and some of them leave it up the insurance company.


The issue of “total loss” of a vehicle discussed above often goes hand-in-hand with a state’s salvage/vehicle title branding laws and the two concepts are often conflated.


When a vehicle is declared a total loss, the insurance company usually takes ownership of the vehicle. The title is transferred into the insurance company’s name, and it then sells the vehicle to a salvage dealer, who in turn sells it to a parts yards or a recycler.


On occasion, the insured may want to keep the salvage vehicle for sentimental or financial reasons. In that case, the insurance company pays the insured the ACV less the deductible and salvage value of the vehicle.


Some states have salvage laws which prevent an insured from keeping a total loss vehicle. If the insured keeps the salvage vehicle, it should not be removed from the insurance policy until a rental vehicle is no longer being used and the vehicle is no longer registered in the insured’s name.


Many “totaled” vehicles are repaired and sold to the public after they are “totaled.” Insurance companies are required to declare a car totaled and apply for a salvage title once damage reaches a certain point under a state’s law.


Salvage laws help the public know what it is paying for when it buys a salvaged vehicle. The definition of a “salvage vehicle” differs from state to state.


Generally, however, a salvage vehicle is one that has been in some sort of accident or had damage occur and has been...