How do adjusters determine if a car is totaled?

What do auto insurance adjusters look for to determine if a car is totaled?

To determine if a car is totaled, the total loss adjuster will look at where the damage is located on the vehicle and the cost to repair that damage, including parts and labor. They will then compare the cost to the value of the vehicle.

It's important to understand that, with the complex systems found in today's vehicles that include computers, sensors and backup cameras, the damage may be much more costly that it appears at first glance. Adjusters aren't just looking for visible damage, like a dent in your bumper, but what systems inside the bumper may have been damaged.

Total loss myths vs. facts:

Learn the truth about common concerns when it comes to total loss claims.

1. A car can be totaled even if it's still drivable.
   Fact: A car can be considered totaled even if it’s drivable. If repair costs exceed the insurer’s total loss threshold, the car is deemed a total loss.
2. An insurance adjuster can decide to total my car based on their personal judgment.
   Myth: Insurance adjusters use standardized calculations, such as actual cash value (ACV), repair costs, and salvage value, to determine if a car is totaled—not personal preference.
3. You can negotiate the value of your car with the insurance company.
   Fact: You have the right to negotiate the settlement you receive for your car. You'll need to produce evidence that the car is worth what you say it is.
4. A total loss settlement is enough to buy a new car.
   Myth: The amount of the settlement is based on the pre-accident fair market value of your car, and not on what it would cost to replace your car new.
5. You can keep a totaled car and still get the same insurance money.
   Myth: You can keep your totaled vehicle in many states, but the salvage value of the car will be deducted from your insurance settlement.

How do insurance companies decide to total a car?

While each car insurance company approaches the decision differently, many insurers declare the vehicle a total loss if the estimated cost of repairs plus the salvage value equals or exceeds the car's actual cash valueActual Cash Value (ACV) is the current market value of your car, considering depreciation. It's the amount your insurance will pay if your car is totaled or stolen..

The actual cash value is a car's fair market valueThe price at which property would change hands between a willing buyer and a willing seller, where both parties have reasonable knowledge of the relevant facts and neither party is under any compulsion to buy or sell. – or, replacement cost less depreciationDepreciation is the decrease in your car's value over time due to wear and tear, age and mileage. Depreciation is used to determine the actual cash value of a vehicle in the event of a total loss.. Adjusters typically determine a car's actual cash value by looking to their company's proprietary database of values.

Some insurers total the car if repair costs exceed a certain percentage of the car's actual cash value. Common thresholds for totaling a vehicle are 51 percent or 80% of the value, at the insurer's discretion.

Some states impose guidelines for the percentage at which a vehicle can be declared a total loss. This is called a total loss threshold, and it can vary.

How do insurance adjusters estimate damage?

Insurance adjusters use industry data to estimate the cost of the damage to your car. This includes the average cost of replacement parts in your area and the cost of repairs based on similar damage.

Most insurance companies will estimate repair costs based on aftermarket replacement parts, but depending on your car insurance policy and where you live, the company may use original manufacturer equipment (OEM) parts in the estimate, which are usually more costly.

Can you disagree with the adjuster's decision?

If you don't agree with the decision to total the car, or the valuation of it, there are steps you can take to either challenge the insurance adjuster's determination or to reclaim the totaled vehicle.

• Challenging list value. You're entitled to the pre-accident market price of the car. if it's a total loss The insurer's valuation, based on the car's make, model and year, may understate your vehicle's market value. You can argue that your vehicle is worth more than the standard listed price by submitting service and mileage records, as well as affidavits from mechanics.
• Disputing an insurance assessment. To dispute the claims adjuster's assessment, you may hire an independent appraiser, contact a consumer representative at the state's department of insurance or, as a last resort, pursue arbitration or litigation.
• Reclaiming a totaled vehicle. Most insurers allow owners to retain a totaled vehicle. In this case, you will get a smaller settlement from the insurance company, since it is forfeiting the salvage value of the car. 

State law will also have an impact on whether or not you can retain a totaled vehicle. It may have a salvage title and cost more to insure. However, you may get more for the car if you sell it for parts yourself than if you let the insurance company have it.

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