In auto insurance, a total loss claim is filed when a car is deemed too damaged to be repaired or the cost of repairs will exceed the actual cash value (ACV) of the vehicle.
There’s a lot of stress and confusion after a severe accident. But filing a total loss claim – and getting the amount of compensation you’re rightfully owed – shouldn’t be one of them.
At SuperCarClaims.com, we make sure owners of exotic, luxury, rare, and collectible vehicles get the maximum amount for their total loss claim. In this article, we’ll go into detail about what a total loss claim is, including the challenges that these types of claims pose to supercar owners.
Total Loss Claim Definition
A total loss claim means your insurance provider will pay a settlement to replace your vehicle, rather than covering the costs of repairs.
When is a car considered a total loss? That depends. As mentioned, there are two main reasons why insurance may declare your vehicle a total loss after an accident:
- Constructive total loss: It was so thoroughly damaged that a full repair wouldn’t be possible
- Economic total loss: Repair costs would be higher than the vehicle’s ACV immediately before it was damaged
You have little control over whether insurance declares your vehicle a total loss after an accident. If you disagree, however, you may be able to appeal or negotiate the decision with the help of a car accident attorney who focuses on supercars and other high-value vehicles.
How Does a Total Loss Claim Work?
The determination of a car’s ACV is generally done by the insurance company based on current pricing guides and taking into account the car’s make, model, year, mileage, and pre-accident condition. As you can imagine, these calculations are rife with potential for error, especially when it comes to valuing rare, luxury, and exotic vehicles.
Repair cost estimates can be a headache, too, for supercar owners, with rare and specialty parts adding up quickly. And if you want to keep your car and finance repairs yourself, you’ll be facing a steep reduction in your total loss settlement, since insurance deducts the salvage value of a vehicle in these instances.
Once insurance calculates the numbers, they’ll use either state-specific total loss thresholds or internal thresholds (depending on where you’re located) to decide if you’re looking at a total loss. Thresholds usually range from 60% to 100%. A provider that calculates thresholds at 75% then would call a $100,000 vehicle an economic total loss if repairs cost $75,000 or more.
The Total Loss Claims Process
There are several steps involved in filing a total loss claim.
Step 1: Initial Accident Reporting
Report the accident to your insurance company as soon as possible, making sure to include relevant details like evidence of vehicle damage, police reports, and the specifics of what happened.
Step 2: Vehicle Inspection and Damage Assessment
Insurance will assign an adjuster to your claim. Their job is to assess the vehicle’s damage, calculate ACV, and gather estimates on repair costs.
Step 3: Total Loss Determination by Insurer
Based on the information provided by the adjuster, insurance will decide whether the car is a total loss. They will then put together a settlement offer for the vehicle’s owner.
Step 4: Claim Settlement and Title Transfer
Once a total loss settlement amount is accepted by both parties, the settlement is paid out and ownership of the vehicle transfers to the insurance company. Owners can opt to keep their vehicles for a reduced settlement.
Components of a Total Loss Settlement
The bulk of a total loss settlement is made up of the vehicle’s ACV, which is calculated based on market comparisons, book value, and/or professional appraisal.
Other components that may add to or deduct from the settlement amount include tax, title, and registration fees; loan/lease gap coverage; unused registration fees; use of aftermarket equipment; sales tax credits; and any liens.
Most policies also have a deductible for total loss claims, which is subtracted from the ACV.
Owner Options After Total Loss Determination
After insurance declares a car a total loss and offers a settlement, a vehicle’s owner may:
- Accept the settlement
- Challenge the total loss determination
- Negotiate the settlement amount
- Retain the vehicle with salvage value dedicated from the settlement
For owners of collector/luxury vehicles, private appraisals and calculations are generally recommended prior to accepting the insurance’s total loss settlement offer. SuperCarClaims.com can help with this process, providing professional representation and ensuring you get the settlement you deserve.
Call to Discuss Your Supercar Total Loss Claim
We help luxury car owners protect their investment and their sanity amidst a total loss claim. Contact us at (833) 822-2232 today for assistance, and never settle for less than you’re owed.
