RE: What determines a total loss vehicle? Farmers insurance?
when you get into a car accident that to determine a total loss of a vehicle the damage to the car has to be a certain percentage of what the car was worth before the accident. What is this percentage for farmers insurance? Is it different for every company? Is there a state law for total loss percentages?
A total loss is when the amount of the damages exceeds the value of your car in the condition it was in before the accident minus the value of the car after the accident. The figure of “70%” or 80% is used because the salvage return (what the insurance company gets from selling the leftover hulk), plus the savings in rental car and other expenses is about 20-30% of the pre-collision value of the car.
This “threshold” number varies by company, by state, by vehicle age (higher for older cars as they bring less in salvage), and by state. It can also be affected by other factors like what type of vehicle it is, the time of year, or even (in borderline cases) whether you want the car totaled or not.
Some states have laws governing total losses. For example in Kentucky a vehicle that has damage that exceeds 70% of the value of the vehicle is by law an automatic total loss. Across the river in Ohio insurance companies can spend as high of a percentage of the value of a vehicle to fix it as they want.
75-80% is just a rule of thumb. You could total-out a late model 4X4 pickup right before winter at 50% in some cases and still do okay since the salvage return on such a vehicle will be very high. On the other hand you could pay 100% (or even more) to fix an old junk car since it would cost more to tow it to the salvage yard than it could ever be sold for at auction.