In the event of a car accident, if a vehicle is damaged beyond repair, then it becomes classified as a “total loss” by your insurance company. This can affect how your car insurance claim is paid. There are four primary factors considered before a vehicle is labeled as a total loss.
The Actual Cash Value is determined by a number of factors that determines the value of your car that would be paid to you in the event of a total loss. Insurance companies determine ACV by considering the age of the vehicle, the condition of the vehicle, the mileage, maintenance, and even Kelly Blue Book value recommendations.
If the cost of the repair is more than the value of the car, then your insurance company will take the cheaper route, deem your vehicle a total loss and pay you the Actual Cash Value of your vehicle.
In addition to considering the cost of the repairs and the value of the car, the standard of the repairs themselves are also a consideration. If the car cannot be repaired to industry safety standards or would not be cost effective to do so, then your vehicle may be deemed a total loss.
When a car is labeled as a total loss by your insurance company, it will take ownership of the vehicle. The title is transferred to your insurance company after you are paid the ACV of the vehicle. The title is changed to a salvage title and the vehicle is then sold to a salvage company.
In Florida, a vehicle that is damaged by 80% or more of its pre-accident ACV is deemed a total loss and is issued a salvage title. This means that if the cost of repair is estimated at 80% of the car’s value, then the car is a total loss.