1. Cost of Repairs:
- The cost of repairs is compared to the car's Actual Cash Value (ACV), which is the market value of the car before the accident.
- If the repair cost exceeds a certain percentage (usually around 70-80%) of the ACV, the car is likely to be totaled.
2. Extent of Damage:
- The severity and extent of the damage are evaluated.
- If the vehicle's frame or unibody is damaged, compromising its structural integrity, it may be totaled.
- Extensive damage to critical components, such as the engine, transmission, or airbags, can also lead to a total loss.
3. Safety Concerns:
- The safety of the vehicle is a significant factor.
- If the car cannot be safely repaired or restored to pre-accident condition, it may be totaled even if the repair cost is below the threshold.
4. Salvage Value:
- The salvage value of the vehicle is also taken into account.
- The insurance company may sell the damaged car for scrap or parts, which reduces their financial liability.
- If the salvage value is high enough, it can influence the decision against totaling the car.
5. State Laws:
- Total loss thresholds and criteria vary from state to state.
- Some states have specific guidelines based on the car's age, mileage, and condition, which may impact the decision.
It's important to note that totaling a car is not solely based on the severity of the damage. The financial cost of repairs compared to the car's value and the potential safety risks are primarily considered. If the insurance company determines that the car is a total loss, they will compensate the owner based on the ACV, minus any applicable deductibles or salvage value.
