When is A Vehicle Considered a Total Loss?

By Gary Wickert | December 5, 2013

  • December 5, 2013 at 4:31 pm
    Ronnie Sonnier says:
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    One factor NOT taken into consideration is that there may be a (or some) hidden or unforeseen damage that may negatively impact the value of the repairs.

    If it’s close, management may advise to add something to the estimate to total it, thereby protecting their interest.

    • October 15, 2014 at 8:32 am
      Kristy says:
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      I second this

  • December 9, 2013 at 10:38 am
    Dave King says:
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    This article implies that in Florida, the “TLT” is 80%, however that is incorrect. In Florida, you can repair a vehicle up to 100% of ACV before a branding of the title is required by statute. The fact in Florida, is that the “80%” simply means that if the cost to repair a damaged vehicle is 80% of it’s value or more, then if in fact the vehicle is declared a total loss by the insurance company, that the salvage title returned on the salvage will be a “Certificate Of Destruction” in the insurer’s name and not eliglible to be rebuilt.

  • December 16, 2013 at 10:38 am
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    In at least some of the TLT states, rental costs are also considered in determining whether a vehicle is a constructive total loss.

    • November 6, 2014 at 1:51 pm
      Rosenblatt says:
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      Why would someone down-vote this accurate comment?

  • December 16, 2013 at 1:00 pm
    Leslie Johnson says:
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    I don’t believe his percentage is correct for the state of Iowa either. The “Damage Disclosure” kicks in at 50% – meaning if repairs exceed 50% of the market value of the vehicle then the vehicle must have a damage disclosure on the title. The “market value” is determined by NADA book value at the time of the loss.

    • April 22, 2014 at 10:35 pm
      Markus says:
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      http://www.iowadot.gov/mvd/omve/salvage.html
      Click on the first drop down menu titled “what is an Iowa salvage vehicle”
      It states that when the cost to repair exceeds 50% of the Fair Market Value it is a total loss.

  • December 16, 2013 at 1:42 pm
    C Smith says:
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    The article should have also mentioned the NMVTIS definition of a total loss. I believe this law takes precendent unless a individual state’s law is MORE restrictive than the NMVTIS standard.

  • March 9, 2014 at 10:36 pm
    greg Mathews says:
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    Are there special considerations that affect the determination of whether to declare a vehicles a total loss when it has been submerged in flood waters to the top of the hood (and above the electrical systems) for two days?

  • March 13, 2014 at 2:47 pm
    Muhammad Arif says:
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    how the third party damage covered by this collision

  • March 13, 2014 at 5:16 pm
    Kevin Badiei says:
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    I like how this article says that California is a TLF state. California is not a TLF state and I have emailed the “lawyer” who wrote this article about this error.

  • March 14, 2014 at 12:41 pm
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    While certain noisy people who seek attention by criticizing articles such as this which attempt to galvanize the law for the benefit of the industry (viz., the slightly under-informed Kevin Badiei who I suspect may be an aggrieved auto repair technician slightly out of his depth), the information regarding California’s law was garnered from several sources which confirm the information contained in this article, including articles HERE and HERE, as well as many other places. The article says, “If the TLT is not dictated by the state, an insurance company will usually default to something known as the Total Loss Formula (TLF) which is: Cost of Repair + Salvage Value > Actual Cash Value.” California case law dictates that “there is a total loss only where costs of repair exceed the pre-repair value of the vehicle.” Carson v. Mercury Ins. Co., 210 Cal. App. 4th 409 (Cal. App. 2012). CVC Section 544 defines, in part, a total loss vehicle as a vehicle that has been wrecked, destroyed, or damaged, to such an extent the insurance company considers it uneconomical to make repairs to the vehicle and the vehicle is not repaired by or for the person who owned the vehicle when the damage occurred. In talking to the California Insurance Commissioner, we are told that California has an informal “rule of thumb” that if the cost of repair and salvage value exceeds 50% of the actual cash value of a vehicle, it is considered a total loss. However, that is neither provided statutorily nor enforced in California as it would be in a TLT state. The Commissioner has seen insurance companies go as low as 50% in their determinations. Where a vehicle’s undamaged fair market value is lower than the cost of repairs, it would be wasteful to repair it. A comparable vehicle could be purchased for less money. However, if it costs less to repair the vehicle than to purchase another comparable one, it would be wasteful not to repair it. Logically, a vehicle is “uneconomical to repair” when the cost of repairs exceeds the vehicle’s undamaged fair market value. Martinez v. Enter. Rent-A-Car Co., 119 Cal. App.4th 46 (Cal. App. 2004). The noisy Kevin Badiei failed to even identify in his emails to me which state he had concluded was incorrect. He now says California. As we can see, however, he is wrong. The noisy Kevin Badiei (who apparently has a lot of free time between fender repairs on his hands has emailed me several times without pointing to any authority or suggesting what he thinks the rule in California actually is) would do well to point to a statute section or administrative regulation which covers this issue. That way, we could all learn from him. He’s obviously troubled and threatened by lawyers, however, seeing as he put the word lawyer in quotes. Chances are he isn’t done making noise, so we can all stand by and hope to be edified by a more scholarly response from him. California is a TLF state. Sorry, Kevin. Go stalk somebody else. Your 30 seconds of fame have come to an end.

  • March 18, 2014 at 9:53 pm
    Kevin Badiei says:
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    I am not an auto repair technician. Your suspicion is wrong. The two links you gave to the two articles are not the law. They are simply articles written by journalists, who apparently do not know the law in California. These articles are not legal authority. I could care less what some “article” says. An article is not legal authority. You quote one of the article’s which says ““If the TLT is not dictated by the state, an insurance company will usually default to something known as the Total Loss Formula (TLF) which is: Cost of Repair + Salvage Value > Actual Cash Value.”

    The TLT in California IS IN FACT DICTATED BY THE STATE. Therefore, the above quote from the article is completely irrelevant. You even say yourself “California case law dictates that “there is a total loss only where costs of repair exceed the pre-repair value of the vehicle.” Carson v. Mercury Ins. Co., 210 Cal. App. 4th 409 (Cal. App. 2012).” This means that the TLT is clearly dictated by the state of California.

    You then state “CVC Section 544 defines, in part, a total loss vehicle as a vehicle that has been wrecked, destroyed, or damaged, to such an extent the insurance company considers it uneconomical to make repairs to the vehicle and the vehicle is not repaired by or for the person who owned the vehicle when the damage occurred.” You then state that you talked to the insurance Commissioner and he told you that California has an “informal rule of thumb” that “if the cost of repair AND SALVAGE value exceeds 70% of the actual cash value of the vehicle. it is considered a total loss.” This is wrong.

    What you fail to understand is that California case law has interpreted the terms “uneconomical to repair” in vehicle code 544 to mean when the cost of repairs exceed the predamage value of the vehicle. This is from the California case law Martinez v. Enterprise Rent A Car (2004):

    “a vehicle is not a total-loss salvage vehicle unless, based on an objective standard, the cost of repairs exceeds the vehicle’s predamage retail value. ”

    “The Legislature’s use of the term “total loss salvage vehicle” as opposed to simply “salvage vehicle” is significant.  “Total loss” is commonly used to mean a “complete destruction” of the property at issue.  (Cf. Black’s Law Dict. (7th ed.1999) defining “total loss” as “[t]he complete destruction of insured property so that nothing of value remains ․”) 3 Moreover, legal treatises are consistent in defining a vehicle as a “total loss” where the cost of repairs exceeds the vehicle’s precollision fair market value.   (Couch on Insurance (3d ed.) § 177:16;  7A Am.Jur.2d (1997) Automobile Insurance, § 409, p. 201;  C.J.S., Insurance, § 1231.)

    When the term “uneconomical to repair” is given its ordinary meaning, it is in line with the above definition of “total loss.”   The dictionary definition of “uneconomical” is “costly, wasteful.” (Webster’s 3d New Internat.   Dict. (1986) p. 2493.) Thus, the interpretation of section 544 requires a determination of when it would be “wasteful” to repair a damaged vehicle. Clearly, where a vehicle’s undamaged fair market value is lower than the cost of repairs, it would be wasteful to repair it.   A comparable vehicle could be purchased for less money.   However, if it costs less to repair the vehicle than to purchase another comparable one, it would be wasteful not to repair it. Logically, a vehicle is “uneconomical to repair” when the cost of repairs exceeds the vehicle’s undamaged fair market value.”

    “Further, defining a “total loss salvage vehicle” under section 544 as one where the cost of repairs exceeds the vehicle’s predamage fair market value is consistent with section 4453.   That section sets forth the information required on a vehicle registration card.   Certain vehicles must be specifically identified, including “[a] motor vehicle rebuilt and restored to operation that was previously declared to be a total loss salvage vehicle because the cost of repairs exceeds the retail value of the vehicle.” (§ 4453, subd. (b)(1), emphasis added.)”

    “Appellants contend that section 4453 creates a special subset of the general, broader class of “total loss salvage vehicles” defined by section 544.   According to appellants, this more specific class should be confined to section 4453 and its particular purpose of identifying certain types of vehicles on registration cards.   Thus, appellants’ interpretation separates “total loss salvage vehicles” into two classes, those that the owners subjectively decide are  uneconomical to repair and those that are damaged to the extent that the repair costs exceed the retail value but are thereafter rebuilt and restored.

    However, appellants’ position violates basic rules of statutory interpretation. Appellants are attempting to read section 544 in isolation rather than with reference to the entire statutory scheme.   This leads to the untenable result of a single term being defined in two different ways.   Such an interpretation is contrary to the established presumption that “the Legislature did not intend to act inconsistently on the same subject.”  (Jacobs v. State Bd. of Optometry (1978) 81 Cal.App.3d 1022, 1031, 147 Cal.Rptr. 225.)   Accordingly, it must be concluded that section 4453’s description of a “total loss salvage vehicle” does not create a separate class of such vehicles but, rather, helps to clarify the meaning of that term under California law.”

    “In sum, a “total loss salvage vehicle” as defined by section 544 is one where the cost of repairs exceeds its predamage retail value, i.e., it is “uneconomical to repair.”   Moreover, whether the vehicle qualifies as such is established by objective standards.   The retail value can be obtained from a widely accepted source such as the Kelley Blue Book. Cost of repairs can be ascertained through estimates from qualified mechanics.”

    Therefore, the California Court of Appeal has interpreted the terms “uneconomical to repair” in vehicle code 544 to mean when the cost of repairs exceed the value of the vehicle. They did this to maintain consistency between vehicle code 544 and vehicle code 4453, since vehicle code 4453’s standard for a total loss was “because the cost of repairs exceeds the retail value of the vehicle.”

    Therefore, this means that a total loss occurs only when the cost of repairs exceed the vehicle’s value. Therefore, this means that California’s TLT is 100%. Therefore, all your articles and all your insurance commissioner discussions are irrelevant, because case law is saying something else. You yourself even write “”California case law dictates that “there is a total loss only where costs of repair exceed the pre-repair value of the vehicle.” Carson v. Mercury Ins. Co., 210 Cal. App. 4th 409 (Cal. App. 2012).”

    In Carson v. Mercury Insurance (2012), they affirmed the Martinez standard and ruled that a vehicle worth $24,500 with $17,722 in damage (a 72% threshold of damage to value) WAS NOT A TOTAL LOSS because the cost of repairs did not exceed the $24,500 predamage value of the vehicle. This means that a vehicle with 72% of its value as damage DID NOT MEET THE CALIFORNIA DEFINITION OF “UNECONOMICAL TO REPAIR”. Therefore, a 72% threshold was ruled in published case law to not be a total loss. Yet you write “In talking to the California Insurance Commissioner, we are told that California has an informal “rule of thumb” that if the cost of repair and salvage value exceeds 70% of the actual cash value of a vehicle, it is considered a total loss … The Commissioner has seen insurance companies go as low as 50% in their determinations.”

    In addition, you state “California is a TLF state. The TLT is not dictated by state law or administrative regulation and the decision is left to the subjective determination of the insurer and policy language”. This is wrong. The total loss determination is not a subjective standard at the discretion of the insurer. The Martinez court clearly stated “In sum, a “total loss salvage vehicle” as defined by section 544 is one where the cost of repairs exceeds its predamage retail value, i.e., it is “uneconomical to repair.” Moreover, whether the vehicle qualifies as such is established by OBJECTIVE STANDARDS. The retail value can be obtained from a widely accepted source such as the Kelley Blue Book. Cost of repairs can be ascertained through estimates from qualified mechanics.”

    Therefore, your statement that “The TLT is not dictated by state law or administrative regulation and the decision is left to the subjective determination of the insurer and policy language” is clearly wrong. The TLT is in fact dictated by California state law, as being 100% of the vehicle’s predamage value. This 100% TLT is what is considered “uneconomical to repair” in vehicle code 544, as interpreted by California case law. Furthermore, “whether a vehicle qualifies as such is established by OBJECTIVE STANDARDS”, as the Martinez court decided, not subjective standards, as you are asserting.

    Furthermore, I find it utterly hilarious that you write “However, that is neither provided statutorily nor enforced in California as it would be in a TLT state.” Then, you subsequently write “California is a TLF state. The TLT is not dictated by state law or administrative regulation and the decision is left to the subjective determination of the insurer and policy language.” So, first you write that California is a TLT state, then you write that “California is a TLF state. The TLT is not dictated by state law or administrative regulation and the decision is left to the subjective determination of the insurer and policy language.” These two statements completely contradict one another. Good job.

    You are a lawyer, and yet you do not know the law. The total loss decision is NOT left to the subjective determination of the insurer. The California threshold for a total loss is when the cost of repairs exceed the predamage value of the vehicle. The terms “uneconomical to repair” in vehicle code 544 have been interpreted this way by Martinez v. Enterprise Rent A Car (2004) and Carson v. Mercury Insurance (2012). California case law has clearly decided that a vehicle is “uneconomical to repair” in vehicle code 544 only when the cost of repair reaches 100% of the vehicle’s value. California case law does not mention anything about salvage value being a factor in its interpretation of whether a vehicle is “uneconomical to repair”. However, you write that “”if the cost of repair AND SALVAGE VALUE exceeds 70% of the actual cash value of the vehicle, it is considered a total loss.” You then write “The TLT is NOT DICTATED BY STATE LAW or administrative regulation and the decision IS LEFT TO THE SUBJECTIVE DETERMINATION OF THE INSURER AND POLICY LANGUAGE.” You claim to be a lawyer, and yet you do not know the law. I am a nonlawyer, and I know California’s total loss law better than you do. Good job. As a lawyer, you have no idea what you are talking about. Some “lawyer” you are. Almost 30 years experience? What a joke. How many clients have you screwed up in the court? Since you do not know California law and its state threshold, how many other state thresholds have you got wrong in your article? The credibility of your entire article is in question. “Your 30 seconds of fame have come to an end.”

    • October 10, 2015 at 3:47 pm
      r. dominguez says:
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      what happens when the TLF state, uses retail value, offered on the current Auto Market in the area you are in. but the vehicles, being used to arrive at an average value do not exist. And Auto Dealers have advertised the vehicle, that they don’t have in there inventory, and the consumer is left without the ability to get a fair replacement for the loss.

      • June 9, 2016 at 12:07 am
        Kevin Kalland says:
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        You come to a negotiated agreement/value. Obtain a signed proof of loss from your insured. If a liability claim a property damage release from the claimant.



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