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Insurance companies determine if a car is a total loss when the cost of repairs exceeds a certain percentage of the car’s value. This evaluation involves several factors to decide the most cost-effective solution.

Factors influencing total loss decision

  • Repair costs – Insurers assess the cost of repairs by getting estimates from qualified mechanics. If repair costs approach or exceed a set percentage of the car’s value, it’s likely considered a total loss.
  • Car’s value – Factors like age, mileage, condition, and market value determine the car’s pre-accident value (actual cash value or ACV).
  • Safety and structural damage – Severe structural or safety damage might result in a total loss declaration, even if repair costs are below the threshold.
  • State regulationsLaws in your state or country can affect the total loss determination process.

The assessment process

  • Damage evaluation – An adjuster inspects the vehicle’s damage and estimates repair costs.
  • Comparison with value – Repair costs are compared to a predetermined percentage (typically 70-100%) of the car’s ACV.
  • Decision and settlement – If repair costs exceed the threshold, the insurer declares it a total loss. You’re then offered a payment based on the ACV minus your deductible.


Understanding how insurance companies decide if a car is a total loss involves considering repair costs, the car’s value, safety concerns, and state regulations. Knowing these factors is vital to navigate the process more confidently in case of an accident.