Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jul 14, 2021

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In a nutshell...

  • Each car insurance company has different procedures in place to contest decisions, but they all must make it possible to do so
  • Modern cars also require much more labor intensive repairs
  • If a car is severely damaged, a parts dealer will probably be the likely candidate for purchasing the car at auction.

When an individual makes a car insurance claim the car insurance company must decide whether it is worth the money to spend on repairs.

While the car may not visually appear to be a total loss, the designation means it’s cheaper for the insurance company to pay for replacement than try to repair the vehicle.

An accident that damaged the rear bumper and trunk of a 1970s sedan would be very inexpensive to repair, and many car insurance companies would be likely to do so.

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Why are cars so much more costly to repair?

The reasons for the rise in repair costs are as numerous as the circumstances of each individual accident. However, the two most important factors are the cost of parts and the labor intensity of the work.

They require highly trained individuals with specialized skills in the various components that make up a car. All of this translates into higher labor costs and higher repair costs.

Labor that might have cost $30-$40 an hour 20 years ago will exceed $100 per hour today.

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What if I don’t agree with my car insurance company’s assessment of total loss?

If your car insurance company declares your damaged vehicle a total loss, they will offer you an amount they deem sufficient to cover the replacement of it at its current street value.

Quite often, this amount of money is significantly less than the consumer is prepared to accept. This leads to the question of whether consumers can contest the decision of the insurance company.

If you contest your insurance company’s assessment of total loss and they still refuse to budge, you can always petition your state insurance department or try civil litigation.

Even if you win your case, you probably spent more money than you would have by making up the difference between what was offered and what you would spend to replace your vehicle.

What does the car insurance company do with my car if it’s deemed a total loss?

Once a car insurance company has decided your vehicle is a total loss and issues you a check, they become the legal owner of your car.

If you believe your insurance company undercut you in their estimate of your car’s value, this is one way for you to recover some of their perceived loss.

If your car insurance company decides to haul away your car themselves, they will most likely put it up for sale at auction. Total loss vehicles sold at auction will be deemed as such.

Does a total loss accident mean anything if I only have liability insurance?


While the definition of a total loss accident remains the same, it’s meaningless to you if you don’t have collision insurance. Drivers who only carry minimum liability coverage have no protection against damage done to the vehicles.

In those cases, the driver of a vehicle involved in a total loss accident would have to replace his or her truck out-of-pocket. Minimum liability only covers bodily injury and property damage claims, not damage to vehicles.

For example, if you purchase a brand-new, $20,000 vehicle with a bank loan, you will need collision insurance to protect you against a total loss accident.

Without such coverage, not only would you be without your car, but you’d also be required to pay the bank what you owe them.

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