What is Total loss?

A total loss is when an insurer decides a damaged car isn't worth repairing and pays its value instead. Depending on the state, that's when repair costs reach a set percentage of the car's value, or when repairs plus salvage value reach the car's value (the Total Loss Formula).

The payout is based on the car's actual cash value, which the insurer sets from comparable vehicles. When those comparables are off, the offer comes in low, and the owner can usually dispute it through the policy's Appraisal Clause.

See how the referral program works The one-pager, the referral line, the AI assistant and the Appraisal Clause, set up for you.

More terms

Actual cash value (ACV)Appraisal Clause Umpire (appraisal)Total Loss Formula Total loss threshold Salvage value Diminished value Comparable vehicle (comp)Fair market value (FMV)Loss of use Property-damage-only claim Referral agreement (between law firms)Demand letter

Updated 2026-11-01. General information, not legal advice; policy wording and state rules vary. TRUEclaims is not a law firm.