How Insurance Companies Calculate Total Loss Value of Car?

How do insurance companies determine total loss value?

After a claim is made to the insurance company against a damaged car, they decide whether the car should be repaired, or it should be declared as a total loss.

When the cost of repairing the vehicle to its pre-damaged condition exceeds the cost of current value of the car, the car is declared as ‘total loss’ by the insurance company and they determine the ‘Actual Cash Value’ of the car.

Calculating the total loss value depends on various factors such as company policies, state rules, make, and manufacture of the company. Here’s the process of doing so:

- An ‘adjuster’ is appointed by the company to inspect the condition of the damaged car. The adjuster looks for physical and mechanical condition of the car and determines whether it should be repaired or not.
- After inspecting, the adjuster calculates the ‘Actual Cash Value’ of the car after taking into consideration the depreciation and demand of the car in the area
- The determined value of the car is the assumed market value of the car in its pre-damaged condition
- The factors on which actual cash value depends include:

 Manufacturing year
 Make and Model
 Mileage
 Physical wear and tear
 Demand and supply in the area