A vehicle is a “total loss” when the cost of repair plus the salvage value of the wrecked vehicle exceeds the pre-wreck fair market value of the vehicle. This seems simple enough. Why but the analysis gets a little more complicated. Experience has shown that the initial repair estimate frequently missed damage that can only be seen when the vehicle is disassembled. Thus carriers build a margin of error into their decision by considering a vehicle to be totaled when it cost of repair plus the salvage value equals some percentage of the pre-accident value of the vehicle. Additionally, the services and standards used by carriers tend to value everything on the low end of the spectrum resulting the pre-accident values being artificially low causing lower total values. Different states use different total loss thresholds with most states falling somewhere around 75-80%. Texas Transportation Code section 501.091 provides that the TLT in Texas is the fair market value of the vehicle in its’ pre-accident status. Insurance companies are famous for stretching to declare a vehicle a total loss and then use a property damage appraisal service that historically renders low value to pay off the total value property damage. They then sell the salvage and come out ahead of where they would have been had they paid for the reasonable repair of the vehicle.
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