How do you calculate total loss for car insurance?
To calculate total loss for car insurance, you must determine the threshold, know your car's cash value, and find if there is GAP policy availability. Below we’ll cover further details you should know.
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Table of Contents
Table of Contents
Licensed Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Daniel Walker
Licensed Insurance Agent
Kristen is a licensed insurance agent working in the greater Boston area. She has over 20 years of experience counseling individuals and businesses on which insurance policies best fit their needs and budgets. She knows everyone has their own unique needs and circumstances, and she is passionate about counseling others on which policy is right for them. Licensed in Massachusetts, New Hampshire,...
Kristen Gryglik
Updated December 2023
- Different insurance companies use different criteria to determine total loss
- Keeping maintenance records can help you receive more from your insurance company following a total loss
- A GAP insurance policy can be considered if you owe more money on your vehicle than it’s worth because of depreciation
How does your insurance company determine the value of a totaled car? Calculating total loss for car insurance mainly hinges on average car comparison, but there are other factors to the total loss formula that can impact the final result.
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What is a total loss car value calculator?
It is in your best interest to keep all maintenance records to help prove the condition of your vehicle. Total loss can be quite devastating with a vehicle because of depreciation, which is especially true if you still owe money on the car at the time of the accident.
Providing as much information as you can to your insurance claim inspector can help you get fair value for your car. You can learn how to calculate a total loss by using a few specific techniques.
Read more:
- Can you ask your insurance company to total your car? (Negotiate a Write-Off)
- Do I have to pay insurance for a totaled car?
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How to Calculate Total Loss for Car Insurance
In this article, we discuss three proven steps to calculate a total loss for car insurance:
- Figuring out what the total loss threshold is
- Determining the actual cash value of your vehicle
- Deciding if GAP coverage can help
We’ll also discuss if all companies determine a total loss in the same way, and what happens when your car is totaled.
How do I know my total loss on car insurance?
You may be wondering, “What is the total loss threshold? How do insurance companies value a totaled car?” These are questions that generally come along in the process of filing a car insurance claim, and the answer is going to depend on a number of factors. Totaled car values will change based on the type of car it is and what sort of damage occurred.
A car insurance total loss is not necessarily what you may expect. Although a car that is considered a total loss has usually been in an accident, it does not necessarily mean that it is beyond repair or permanently deemed unsafe to drive regardless of repair.
“How do I know my total loss on car insurance?” Claim inspectors deem a vehicle a total loss if the value of the repairs exceeds the actual cash value of the car.
How do insurance companies determine a total loss? How much damage does it take to total a car?
Some insurance companies may differ on the percentage to consider for a total loss, but typically if total loss calculations show a car’s repair costs will exceed 75% or more of the car’s value, the insurance company will declare it a total loss.
To figure out what the total loss threshold is for your insurance company, you will have to contact them.
Insurance is solely about financial protection, so when it comes to determining if a car is a total loss or not the insurance company will ultimately let the money and the cost of repairs make the final decision.
To calculate a total insurance loss for your car insurance, determine the cash value by using the various methods below.
How do I determine the cash value of my car?
Every car has a different cash value, although there are a few factors that are weighed heavily in calculating the insurance value of your car. The basics are consideration of:
- Make
- Model
- Year of the car
This is very similar to determining the selling value of your car using Kelley Blue Book to decide on the trade-in value versus the street value.
Determining Sale Value of a Vehicle
| Vehicle Criteria | Effect on Sale Value |
|---|---|
| Maintenance Records | Having maintenance records may help prove your car’s mechanical condition as well as display any aftermarket value that may have been added to the car. |
| Condition of Car Body | While “fair, good, and excellent” are subjective words, it is important to try to label your car correctly. Recent pre-accident pictures of the car can sometimes be helpful in proving body condition. |
| Mileage | Mileage is easy to prove since it will be on the odometer, and that is the next thing that will be added to the appraisal. The lower the mileage, the higher cash value your car may have, so it’s very helpful to know this number. If you cannot access your odometer to prove the mileage, it is possible that you have an odometer reading on the invoice from your last oil change. |
| Trim Package | The type of trim your vehicle has and any amenities can be part of the deliberation. |
You can get dealer prices from the internet or ask for a quote in writing from a dealer directly. Having a written quote may help your insurance claim inspector as he prepares the appraisal.
How do I dispute the insurance company’s decision? Keep reading to learn how to fight your insurance company’s quote for a totaled car.
If you do not feel the insurance adjuster is giving you a fair assessment, ask if an unaffiliated auto body shop can provide a second estimate. That way you are confident that your totaled car insurance payout is fair.
Some of the best car insurance companies work with auto body shops and have an affiliation that may not be in your best interest.
Your auto insurance company ultimately works for you to protect your financial assets, so if you are not comfortable with what you are being told, ask questions.
In the case of a total loss car insurance settlement, some people may be happy with the payout from the insurance provider.
However, if the vehicle is new and still being financed, chances are the total loss payout will not be enough to cover the balance remaining on the loan agreement.
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Do you have an applicable GAP car insurance policy?
What is GAP insurance? What happens when your car is totaled and you still owe money on it?
The only true protection is to have GAP insurance on an auto loan that covers the financial gap of the loss of a total car.
The table below details what car insurance companies include in their GAP coverage.
New Car Replacement Car Insurance Coverage Details for Major Providers
| Companies | GAP Insurance Details |
|---|---|
| Acuity | Covers first 4 years of new vehicle ownership. Also available for motorcycles. |
| Allied | Applies to cars up to 3 years old; then is replaced by gap insurance. |
| Allstate | Vehicle must be 2 model years old or newer. |
| American Family | Covers first year of new vehicle ownership. Capped at 110 percent of manufacturer’s suggested retail price of original vehicle. |
| Ameriprise | Covers first year or first 15,000 miles. If new vehicle of same make and model isn’t available, pays up to 110 percent of the original vehicle's MSRP. |
| Cincinnati | Coverage must begin within 30 days of buying a new car with fewer than 1,000 miles on it from current or previous model year. |
| Concord Group | Coverage for first 12 months included at no extra cost. Can be extended up to 24 months after purchase. |
| Erie | Covers the first 2 years. Can be added at any time before a loss. |
| Farmers | Vehicle must be insured with Farmers upon purchase and be less than 2 years old or have fewer than 24,000 miles. |
| Farm Bureau (Iowa group) | Applies to vehicles up to 4 model years old (5 in some states). |
| Hanover | Covers first year or first 15,000 miles. |
| The Hartford | Covers the first 15 months or 15,000 miles. Policies available only to AARP members in most states. |
| Liberty Mutual | Vehicle must be less than a year old and have fewer than 15,000 miles. |
| MetLife | Covers first year or first 15,000 miles. |
| Nodak (North Dakota Farm Bureau) | Vehicle must be no more than 2 years old and have fewer than 24,001 miles. |
| Penn National | Does not apply if new car is stolen or damaged by fire. |
| Plymouth Rock | Covers original owner's first 2 years of ownership, with upgrade packages available. |
| Safeco | Applies to original owner of a car less than a year old. |
| Shelter | Covers first year or first 15,000 miles. Included on all Shelter auto policies. |
| Travelers | Covers first 5 years of new vehicle ownership. Does not apply if car is stolen or damaged by fire or flood. Also includes gap coverage and lower deductible for glass claims. |
Vehicles depreciate rapidly, sometimes losing as much as 25 percent of its value as soon as they are driven off of the dealer’s lot.
If a vehicle is financed, then you are most likely making monthly payments that are primarily paying off interest and only a little principal.
How does GAP insurance work if a car is totaled?
If your car is totaled in an accident while you are in this situation then chances are the cash value of your car will not be enough to pay off the loan balance in full.
This means that you are still obligated to make car payments for a car that will no longer be in your possession.
You can take a chance on not having total loss coverage or you can purchase GAP insurance for a fairly hefty price.
When budgeting for the cost of GAP insurance, dealerships will sell GAP insurance for around $500, but you can add it to your auto insurance policy for about five percent of your collision coverage and comprehensive coverage.
GAP (Guaranteed Auto Protection) helps pay for the difference between the actual cash value and the amount still due on the loan in the event a car is considered to be a total loss.
GAP insurance pricing can be expensive, but it is usually considered a good idea for a car that is going to be leased or financed.
GAP can be purchased from some insurance agents and also through dealer financing. Since it is an expensive investment, shopping around for a good rate can be beneficial.
Case Studies: Calculating Total Loss for Car Insurance
Case Study 1: The Threshold Dilemma
Mary’s car was involved in a severe accident, and she filed a car insurance claim to assess the damage. The insurance company determined that the cost of repairs would exceed 80% of her car’s value. As a result, they declared it a total loss. Mary faced the challenge of understanding the threshold used by her insurance company and how it affected the final decision.
Case Study 2: The Cash Value Conundrum
John’s car was totaled in a hailstorm, and he needed to determine the cash value of his vehicle for the insurance claim. He explored various methods, including researching online dealer prices and obtaining quotes from local dealerships. John discovered that these factors heavily influenced the insurance value calculation of his car, and he needed to provide substantial documentation to ensure a fair assessment.
Case Study 3: Bridging the GAP
Sarah recently purchased a new car and opted for a financing plan. Unfortunately, her car was involved in a major accident, resulting in a total loss. Sarah faced the challenge of having an outstanding loan balance that exceeded the actual cash value of the car. However, she had purchased GAP insurance, which helped bridge the financial gap between the insurance payout and the remaining loan balance.
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The Bottom Line
While there is some subjectivity in calculating a total insurance loss for car insurance, the majority of the determining factors arise from computations derived from average comparisons.
The insurance claims inspector has no personal attachment to your car, but since you do, you may feel it is being undervalued.
Emotions removed, if it truly is not being appraised correctly, do some research and present documents to your insurance company to substantiate your claim. This will help you learn how to negotiate with insurance adjustors over a car total loss.
It can be financially painful to suffer a total loss, but if you have GAP it can help ease the burden should your car ever become involved in an accident of this nature.
Request quotes for auto insurance and compare them to make sure you are getting the best deal.
Enter your ZIP to start comparing car insurance rates now and find out how expensive is GAP insurance.
Frequently Asked Questions
How do you calculate total loss for car insurance?
To calculate total loss for car insurance, you must determine the threshold, know your car’s cash value, and find out if there is GAP policy availability.
How does your insurance company determine the value of a totaled car?
Insurance companies determine the value of a totaled car by considering factors such as average car comparison, repair costs, depreciation, and the actual cash value of the car.
What is a total loss car value calculator?
A total loss car value calculator is a tool that helps determine the value of a car that has been deemed a total loss by the insurance company. It takes into account various factors such as depreciation and repair costs.
How do I know my total loss on car insurance?
Your insurance company will deem a vehicle a total loss if the cost of repairs exceeds the actual cash value of the car. Contact your insurance company to determine the specific threshold they use.
How do insurance companies determine a total loss? How much damage does it take to total a car?
Insurance companies typically consider a car a total loss if the cost of repairs exceeds 75% or more of the car’s value. However, the specific percentage may vary among insurance companies.
How do I determine the cash value of my car?
The cash value of a car is determined based on factors such as the car’s age, make, model, mileage, condition, and market value. You can use resources like Kelley Blue Book or obtain quotes from dealers to estimate the cash value.
How can I dispute the insurance company’s decision on the total loss value?
If you disagree with the insurance company’s assessment, you can request a second estimate from an unaffiliated auto body shop or provide additional documentation to substantiate your claim. It’s important to communicate and ask questions to understand the valuation process.
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