Determining Total Loss
Total loss occurs when the actual cost of repairs (repairs + loss of use + betterment) exceeds the auto’s Actual Cash Value (ACV), minus any salvage value.
Some insurers set a threshold (such as 75% or 85%) and if the cost of repairs exceeds that percentage of ACV, then the vehicle is considered a total loss.
Some states mandate the method of estimating ACV. Regardless of the method used, ACV should consider:
• The vehicle’s options package, mileage, use, and overall condition
Common ACV Errors
The most common ACV error is incorrectly identifying the vehicle’s options package. Other common errors include incorrectly assessing the vehicle’s condition, failing to deduct for unrepaired prior damage, and failing to debit or credit for high or low mileage. In addition, comparable vehicle selection is very important when assessing ACV.
Total Loss Payment
After the waiting period for theft has expired, or the damaged vehicle is declared a total loss and the ownership is transferred to the insurer, the loss is paid equal to the ACV minus the deductible.
If the insured keeps the car, the payment equals the ACV minus both:
• The deductible, and
• The salvage figure (net amount received from the sale of the vehicle
minus expenses such as towing and storage)
What We do?
As licensed auto appraisers, our job is to accurately quantify the vehicle’s cash value for settlement purposes. This is usually needed when it’s obvious that the insurer is underpaying for the totaled vehicle.