The Total Loss Process (Simplified)

Your insurance company will deem your vehicle a total loss if:

• It is damaged through collision, fire, hail, etc. and the cost to repair it is close to or exceeds the fair market value of the vehicle, or
• It is stolen and not recovered within a reasonable period of time.

After an accident, your insurance company will send an appraiser to look at the condition of your vehicle and determine the cost to repair it. A comparison will be made between a fair and reasonable market value of the vehicle and the cost to repair. If the repair costs are too high, then the insurance company will give you a cash settlement value to "total" or "write off" the vehicle. In effect, they are buying whatever is left of the vehicle from you at a price equivalent to what it was worth had the total loss not taken place. To receive the settlement payment, you will be required to sign a "Proof of Loss" and submit it with the ownership to the insurance company. At this point, the claim is settled (i.e., finished).

If the vehicle was stolen, the appraiser will gather all pertinent information and documentation from you regarding the vehicle, its options, mileage and condition. Some of the documentation may include the bill of sale, any receipts for major items added and maintenance records. The insurance company may wait for a reasonable period of time to give the police a chance to recover the vehicle. During that time, a fair and reasonable market value of the vehicle should be determined and, if the vehicle is not recovered, you will be given the cash settlement value to write off the vehicle. Once the claim is settled, if the vehicle is recovered, then it belongs to the insurance company.