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The meaning of a total car loss?

On Behalf of | Sep 24, 2021 | Uncategorized |

After a serious accident, your car may be declared totaled by your insurance company in Minnesota. This is necessary under the law to prevent you or another driver from getting into an unsafe vehicle. There is additional information to know about a total loss and how it’s handled by an insurance company.

Total loss definition

A total loss occurs when the costs to repair a car’s damages exceed its actual cash value. When a total loss is determined, the insurance company must provide compensation for the damages. However, not every type of coverage is guaranteed to cover the costs of a replacement.

Some drivers are able to buy back their cars after an accident. But most insurance companies are required to take ownership of a car that is no longer safe to drive and hand it over to a salvage yard.

What happens after a car is totaled?

After an accident, your insurance provider will determine the total costs of the damages and estimated repair costs. For a totaled car, you will receive a payment for the vehicle’s actual cash value or its replacement value.

The actual cash value is the value of the car before it got involved in the collision minus the deductible. The replacement value is the cost of replacing a vehicle at its current marketplace value. A replacement is needed if the car is determined to be too expensive or impossible to repair.

How the insurer handles a total loss

Protect your financial investment by understanding how your insurer deals with an unrepairable car. A total loss is often replaced with a lump sum payment that is either the car’s actual cash value or its replacement value. It’s your responsibility to decide how to file a total loss claim and get back on the road safely.


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