A car is an important investment for every owner. To protect this investment, you opt for its insurance. Unfortunately, when it gets involved in an accident and has serious damage, one thing that you may hear from the insurance company is that it is a total loss. It happens when they think that the vehicle is not worth fixing or can no longer be used for driving.
But here the question arises: how do they determine it? Well, every state in the United States has its own set of rules to decide if a car will be repaired or totaled. Let us break down the Total Loss Threshold by State in this article.
The state’s law that helps determine if a vehicle is a total loss or not is known as the total loss threshold. The insurance company declares it when it believes that the repair cost will be too high in comparison with the actual value of the car.
Simply put, if the repair estimate is equal to or more than the state’s threshold, they will not offer you the payout for repairing your car. Instead, the amount will be based on the actual cash value of the vehicle.
Total loss thresholds vary by state. Most of them use the two main methods to calculate whether a car is totaled or not. Let us understand each type to make it simpler for you:
It has a predetermined percentage value that refers to a limit that the repair cost should not exceed. In simple terms, the states that use this rule have fixed percentages.
When determining a total loss vehicle, the repair cost is estimated and then compared with the pre-defined percentage of the actual cash value. If it equals or exceeds the limit, the insurance company declares your vehicle totaled.
In the US, states like Arkansas, Florida, Missouri, New York, Nevada, Oklahoma, and Tennessee apply a total loss threshold. The most common fixed percentage figure in most states is 70% to 75% while for Texas, it is 100%.
For example, Florida has an 80% rule, which means if the repair cost is exact or exceeds 80% of the actual cash value, the car will be deemed a totaled vehicle.
| Repair Cost | Actual Cash Value | Total Loss Threshold | Result |
| $8000 | $10,000 | 80% of ACV (Florida) | Totaled |
| $6000 | $10,000 | 80% of ACV (Florida) | Repaired |
The total loss formula, or TLF, is about determining the actual cash value, repair estimate, and salvage value of the vehicle. Then, comparing the ACV with the total of repair cost and salvage value. If the ACV is equal to or less than the total estimate, the vehicle is a total loss. This is how the formula looks:
Cost of Repairs + Salvage Value ≥ Actual Cash Value
| Repair Cost + Salvage Value | Actual Cash Value | Result |
| $6,300 + $4000 | $10,000 | Totaled |
| $5,300 + $4000 | $10,000 | Repaired |
States like Arizona, California, Illinois, Ohio, and Pennsylvania use TLF to determine if the damaged vehicle will be repaired or declared a total loss.
| State | Threshold |
| Alabama | 75% |
| Alaska | TLF |
| Arizona | TLF |
| Arkansas | 70% |
| California | TLF |
| Colorado | 100% |
| Connecticut | TLF |
| Delaware | TLF |
| Florida | 80% |
| Georgia | TLF |
| Hawaii | TLF |
| Idaho | TLF |
| Illinois | TLF |
| Indiana | 70% |
| Iowa | 70% |
| Kansas | 75% |
| Kentucky | 75% |
| Louisiana | 75% |
| Maine | TLF |
| Maryland | 75% |
| Massachusetts | TLF |
| Michigan | 75% |
| Minnesota | 80% |
| Mississippi | TLF |
| Missouri | 80% |
| Montana | TLF |
| Nebraska | 75% |
| Nevada | 65% |
| New Hampshire | 75% |
| New Jersey | TLF |
| New Mexico | TLF |
| New Mexico | TLF |
| New York | 75% |
| North Carolina | 75% |
| North Dakota | 75% |
| Ohio | TLF |
| Oklahoma | 60% |
| Oregon | 80% |
| Pennsylvania | TLF |
| Rhode Island | 75% |
| South Carolina | 75% |
| South Dakota | TLF |
| Tennessee | 75% |
| Texas | 100% |
| Utah | TLF |
| Vermont | TLF |
| Virginia | 75% |
| Washington | TLF |
| West Virginia | 75% |
| Wisconsin | 70% |
| Wyoming | 75% |
Understanding the total loss threshold by state is essential for various reasons. Let us find out why:
After the total loss declaration, the whole situation can be overwhelming if you do not know what to do next and what steps you may take. This knowledge allows you to make the smart choice at the right time. You prepare yourself mentally and financially.
You can better understand if the insurance company is devaluing your car. Being aware of these rules gives you direction to challenge their decision and negotiate a better settlement.
The process does not end after just receiving the offer. It involves detailed paperwork as you need to transfer the ownership or apply for the salvage and rebuilt title. When you know this, you stay ahead of time, which helps avoid delays and mistakes in the entire process.
Already, you are going through a stressful situation, and being unaware of your rights, options, and liabilities can create more chaos. If you know the state’s laws, you have peace of mind and more control over the situation.
If you have just received the settlement offer and are feeling confused, you need to understand that you are not obliged to accept it at once. You can take time, ask the right questions to them, or provide your own research by hiring a seasoned and reputable appraisal service.
ADR-Claims can help you every step of the way. Whether it is about settlement or the claim process, our team is dedicated to ensuring you get what you deserve. We are available to guide you through making the navigation process simpler and protecting your interests. Get in touch with the ADR-Claims team today for more detailed assistance!
