What is considered a total loss in Minnesota?

A car is considered a total loss in Minnesota when the cost of repairs exceeds 80% of the vehicle's actual cash value from immediately before the damage. When a car is totaled in Minnesota, the policyholder will receive the car's actual cash value from the insurance company if the loss is covered.

Minnesota Total Loss Threshold

The Minnesota total loss law is also called a total loss threshold. Threshold systems account for the fact that damage is often more extensive than it appears. For instance, the threshold of 80% assumes that a car with that much damage is likely to have even more problems that won't be visible until a mechanic starts repairing the car.

Minnesota Total Loss Law Example

• Pre-crash value: $15,000
• Cost of repairs: $12,750 (85% of car's pre-crash value)
• Result: car is declared a total loss

In this example, the driver's car is totaled according to Minnesota law because the repair cost is more than 80% of its pre-crash value, or actual cash value (ACV).

It's also worth noting that the vehicle used in this example probably cost more than $15,000 when it was originally purchased. The ACV is meant to reflect the car’s worth in its depreciated state, not the cost of replacing the vehicle. If you want a higher payout in the event of a total loss, you should look into optional coverage add-ons like new car replacement or gap insurance.

For more information on what it means for you if your car is totaled, check out WalletHub's totaled car guide.