How does the insurance company decide whether to total or repair the car?


The auto insurance company will decide between the lesser of the two.

  • If it is cheaper to have the car repaired, then the insurance company will pay to have the car repaired.
  • If the repairs will cost more than the current value of the car, then the car insurance will decide to declare the car a total loss. In this case, the company will pay the insured the fair market value of the car prior to the accident, minus the deductible. The car's fair market value will be based on the blue book.

This means that the insurance company's decision to have the car totalled is not based on the condition of the car, but on the value of the car. Even when the car is still repairable and will still run after the repairs, the concern is that the insurance company will only pay the lesser between the cost to repair the car or to total it.

Sometimes, insurance companies use a percentage of the value of the car as its basis. This will vary from company to company. Some insurance companies may decide to total the car when the cost of the repairs reaches 51% of the car's fair market value. There are also others who will make the decision to total if the cost of the repairs is at 75% or 85% of the car's value.

When we say "cost" to repair the car, this will not just cover the mechanic's fee, but also the costs to recover the car from the scene of the accident, for storage, for car parts and other miscellaneous expenses.

Claims Insurance Adjuster

To help provide the insurance company with the information it needs, it will send an adjuster to inspect your car and check the damages. The insurance company may also get the quotes you obtained from a reputable mechanic to see how much the repairs will cost.

Settlement Offer

Once the adjuster has sent his recommendations to the insurance company, the insurance company will give you a total loss settlement offer. You have the option of accepting the offer or of appealing, if you feel that the offer is too small.

Remember, the claims adjuster works for the insurance company, and the first offer is usually the smallest possible offer. You can also get a third party adjuster to make his evaluations as to the value of the car.

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