Total loss in motor insurance occurs when the cost of repairing a damaged vehicle exceeds the vehicle’s value. This can happen due to a severe accident, theft, or vandalism.
Types of total loss in motor insurance
- **Actual total loss:** This occurs when the vehicle is completely destroyed or cannot be repaired safely or economically.
- **Constructive total loss:** This occurs when the cost of repairing the vehicle exceeds 75% of its ACV.
How is total loss calculated?
To calculate total loss, the insurance company will typically send an adjuster to inspect the damaged vehicle. The adjuster will assess the damage and determine the cost of repairs. If the cost of repairs exceeds the vehicle’s ACV, the vehicle will be declared a total loss.
What happens after my vehicle is declared a total loss?
Once your vehicle has been declared a total loss, the insurance company will typically pay you the ACV of the vehicle. You will then need to sign over the title of the vehicle to the insurance company.
In some cases, you may be able to keep the salvage value of the vehicle. The salvage value is the amount of money that the insurance company can sell the damaged vehicle for. However, you will need to pay the insurance company the difference between the salvage value and the ACV of the vehicle.
Tips for preventing total loss
There are a number of things you can do to prevent total loss, including:
- **Drive safely:** Obey the speed limit and be aware of your surroundings when driving. This will help you to avoid accidents.
- **Park in a safe location:** Avoid parking your vehicle in dark or isolated areas. This will help to reduce the risk of theft and vandalism.
- **Maintain your vehicle:** Keep your vehicle in good condition by getting regular oil changes and tune-ups. This will help to prevent mechanical problems that could lead to an accident.
If you have any questions about total loss in motor insurance, you should contact your insurance company. They will be able to provide you with more information and help you to understand your policy coverage.