States That Use Percentages
When looking to determine whether the vehicle can be written off as a total loss, it is important to check the percentages of each state. For example, states such as Alaska, Arizona, Colorado, Connecticut, and Idaho have a Total Loss Threshold of 100%. This means that the cost of the repairs must be at par with the vehicle's actual cash value, or salvage value, to be considered a total loss. There are debates about whether using 100% is the correct choice, as car repair estimates often vary depending on the automobile shop or mechanic. This means that your choice of the auto collision center and its appraised value can be extremely polarized, which would affect the insurance determination of whether the vehicle can be written off or not.
As such, most states implement a simple percentage threshold that ranges between 70 and 75%. This leaves enough room for error, as some shops can be could off by a few thousand, but still considered a total loss. States that employ a 75% rule are Alabama, Kansas, Kentucky, Louisiana, Maryland, Michigan, and New Hampshire. It is important to note when making these determinations that the difference between a few thousand, or even a few hundred dollars, can drastically change the insurance payout. For example, if you are not found at fault, and the vehicle is a total loss, the insurance payout is often greater than if you are not found at fault, but are compensated for the repairs that can be done to your vehicle. It is in the person's best advantage to try and receive a compensation credit for a new, and possibly upgraded, method of transport.
States That Use the Total Loss Formula
Many states utilize a TLF or total loss formula. Some consider this to be the best approach, as it takes the estimated repair value and the salvage value and adds them together. This is then compared to the actual cash value of the vehicle, and the difference is noted. For example, if a car is to be repaired for $8000 and has a salvage value of $1000, and the car's actual cash value is $12,000 - the total loss formula would then be 12,000 - (8000+1000) = $3,000.
Insurance companies can then use this information to determine whether the car is a total loss or not. Some would consider this to be a car that still can be repaired and serviced with enough value left over, while others may implement a percentage in tandem with the formula. Often, this is sometimes combined with a percentage, either 75% or 100%. 100% would mean that any value that is greater than 0 should not be considered a total loss by the insurance company after a collision.
States include California, Delaware, Georgia, Hawaii, and Illinois. Considerations can also be made for damage that occurred outside of a motor vehicle accident. For example, a vehicle that is completely flooded in Illinois is considered a total loss if the repair costs are north of 50% ACV (actual cash value.