What is Total Loss?
After a car accident, depending on the repair amount and the severity of the damage, the insurance company may declare your vehicle a total loss. This means that they are essentially buying it from you for the actual cash value (ACV) immediately before the accident. The insurance adjuster, and depending on where you live would apply one of two tests, either a formula or a state mandated threshold.
1 – Total Loss Formula
Your vehicle is totaled IF: Cost of Repair + Salvage Value > ACV
2- Total Loss Threshold
This percentage is set by your state, usually a percentage of the vehicle’s value. Most states adopt a 75% damage to value as their total loss threshold.
To quantify the Actual Cash Value of your vehicle, the insurance company is required to provide you with an appraisal report or a market valuation.
Insurance companies generally hire an outside company (Mitchell, CCC or Audatex) to compile the data and issue an appraisal report.
This 8 to 10 page report usually describes the vehicle’s condition, equipment and options as well as a list comparable vehicles and a market analysis within your local geographical area.
If you believe that the insurer’s assessment in wrong or unfair you have the right to challenge their ACV. You achieve this by hiring your own independent auto appraiser to produce a counter-valuation, basically a second opinion in the form of an appraisal report.
If the claim is against your own carrier, check your policy, it may contain a valuation dispute method, usually called the appraisal clause.