Candace Baker, Car Insurance Writer
@candacebaker
USAA determines that a vehicle is a total loss when it cannot be safely repaired or the cost of repairs exceeds the car's actual cash value (ACV) - which is what the vehicle was worth prior to being damaged. USAA may also total a car if the cost of repairs exceeds a certain percentage of the ACV, depending on state law.
How USAA Adjusters Calculate Actual Cash Value
After a vehicle is damaged and the policyholder files a property damage claim, an insurance adjuster will try to determine the car's actual cash value. To do this, they will consider several factors, including:
- Make and model
- Year
- Mileage
- Depreciation
- Accident history
- Mechanical problems
- Wear and tear
- Cosmetic problems
- Local demand for similar vehicles
- Sale price of comparable vehicles
Once the adjuster knows the ACV, they will compare it to the estimated cost of repairing the vehicle.
How USAA Determines a Total Loss
In 29 states and the District of Columbia, there is an established total loss threshold (TLT), which means that if the cost of repairs is more than a certain percentage of the car's actual cash value, USAA must total it. For example, Alabama has a TLT of 75%.
In the remaining 21 states, USAA and other insurers will use the standard total loss formula. This means the car is declared totaled if the sum of its repair costs and salvage value exceeds its ACV.
Finally, it may be impossible to safely repair the vehicle in order to make it roadworthy again. In this case, USAA will declare the car a total loss regardless of the actual cash value.
To learn more, check out WalletHub's review of USAA car insurance as well as our guide to totaled cars.
People also ask
What does it mean when your car is a total loss?
When your car is a total loss, it means the cost to repair the car exceeds the value of the car. If your car is declared a total loss your insurer may replace your totaled car with an equivalent one or issue payment for the actual cash value of the totaled vehicle.
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If your car is totaled and you’re not at fault, you should file a claim with the at-fault driver’s insurance company and report the accident to your own insurer as well. The other driver’s property damage liability coverage will reimburse you for your car’s actual cash value up to their policy limits. Actual cash value, or ACV, is the amount the car was worth immediately before the accident.
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