People who get in car accidents often wonder just how an insurance company makes the decision to repair a vehicle. Sometimes, the damage renders repairs futile.

An automobile is declared to be a total loss when the cost of replacing it is less than the cost of fixing it. Of course, there are extremes that go beyond this definition. It is possible for an automobile to become so destroyed that fixing it is not even an option. Obviously, it is then a total loss except for the salvage value of the metal. In normal circumstances, the damage could be repaired, but the cost of doing so might make this impractical.

There are three different people involved in this determination of total loss, and each of them has a vastly different agenda. The car owner is motivated by his emotional attachment to the car. He is thinking of how satisfied he was with it, and trying to determine if a new one might be better. Unfortunately, if he is depending on his insurance, this decision is not going to be his to make anyway. The second party concerned is the auto body shop. They are going to be more interested in attempting to fix the auto. This is what they are in business to do.

The important person in the decision making process is the insurance company appraiser. Each insurance company has its own set of internal criteria for determining total loss. There are no standard tables or formulas that are used by everyone. The appraiser is concerned with determining the actual cash value of the car. This figure, known as the ACV, is determined in a variety of ways by the appraiser. Comparisons are made with similar cars being sold in the area at the same time. There is computer software available that can assist in this determination as well.

Some insurance companies will declare the car totaled if the repairs are as low as 51% of the ACV. Other companies use a figure closer to 80%. There are incidental expenses that include storage, rental of replacement vehicles, and salvage costs. It is these incidental expenses that cause the insurance company to declare the vehicle totaled at such a low repair cost to ACV ratio. The formula could be stated that the car will be declared a total loss if the repair cost plus the incidental expenses equals or exceeds the actual cash value.

Actual cash value will take into consideration prior damage and neglect on a vehicle. The owner is going to often find he disagrees on the ACV, or possibly the repair cost figures. It is a good idea to get a damage estimate of your own from an auto body shop you trust. This will have to be at your own expense. You might also want to do a little research into actual cash value. You do have recourses open in most cases. Despite this the answer to the topic question is simply this: a car is totaled when the insurance company says it is totaled.

Ernie Yetis is with AutoBodyShopStop.com - providing auto body repair information.