Illinois Passes Bill Increasing Transparency in Total Loss Declarations

The new legislation ensures policyholders are fully informed of their rights and options when their vehicle is declared a total loss.


Illinois passed a bill requiring auto insurance companies to provide the owner of a vehicle declared a total loss with a description of how that determination was made.

The bill, HB5559, which applies to all policies issued or renewed after July 1, 2025, amends the Illinois Insurance Code, to require the insurance company to provide the insured with any relevant information to the total loss determination, including repair estimate, estimated vehicle salvage value, assessed market value and other costs and calculations used. This requirement aims to ensure that policyholders are fully informed of their rights and options at a critical time.

"We were thrilled to work with consumer advocates, insurance providers and the Alliance of Automotive Service Providers of Illinois to increase transparency around an insurance company's decision to total a vehicle," said Rep. Tracy Katz Muhl, D-57, the bill's sponsor. "For many families, a car accident is a financial catastrophe, exacerbated by a lack of understanding about the process. Insurance companies will now have to show their math -- disclosing the current market value of the vehicle, the estimated cost to repair, the salvage value, and any other factors used in the calculation. We look forward to continuing to work with consumers and the auto body industry to monitor implementation and build on these reforms."

An earlier version of the bill would have also required insurers to offer policyholders the option to be compensated for repairs that make their vehicles safe to drive after a crash, in addition to existing options for total car replacement or cash settlement.

A spokesperson for Katz Muhl said the bill was amended after conversations with automobile service providers, consumer groups and the insurance industry, in which everyone agreed the best path forward for all involved was to focus on increasing transparency about a consumer's menu of options.

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