What does it mean when they call my car a Total Loss?
Answer:
Your car can be declared a total loss in one of two


ways. It’s either an economic total loss or a constructive total loss. If your car gets pushed off a 600 foot cliff into the ocean below it is a constructive total loss. It’s physically totaled.

On the other hand, even if your car is recovered and doesn’t look like a crumpled heap, it could be called a total loss economically. An economic total loss takes costs into consideration. For example, if your car is worth $5000 but it will cost the insurance company more than that for repairs, it will probably be totaled.

The insurance companies look at what it would cost to buy your car at its pre-accident value and then sell the damaged car for salvage. Next, they compare this figure to the cost of repair, potential supplements, projected lowered resale value, and rental reimbursement costs. If it doesn’t make economic sense to repair the car, they will declare it a total loss and pay you the actual cash value of the car at its pre-accident state.
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