Liberty Mutual 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. Liberty Mutual may also total a car if the cost of repairs exceeds a certain percentage of the ACV, depending on state law.
How Liberty Mutual 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
- 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 Liberty Mutual Determines Total Loss
In 28 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, Liberty Mutual must total it. For example, Alabama has a TLT of 75%.
In the remaining 22 states, Liberty Mutual and other insurers will use the standard total loss formula to decide whether or not to total a vehicle.
Finally, it may be impossible to safely repair the vehicle in order to make it roadworthy again. In this case, Liberty Mutual will declare the car a total loss regardless of the actual cash value.
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