Total Loss Threshold
Also known as: TLT, total loss formula
The Total Loss Threshold is the percentage of a vehicle's pre-loss value at which an insurer must declare it a total loss. Thresholds are set by state law (statutory) or insurance company policy (contractual) and typically range from 65% to 100%.
More detail
- Statutory total-loss states include Texas (100%), Iowa (50%), and many others — see the per-state pages for specifics.
- Some states use a 'Total Loss Formula' (TLF) — repair cost + salvage value > pre-loss value — instead of a fixed percentage.
- Even when a vehicle is repairable, an insurer may declare it a total loss if doing so is cheaper than repair.
Related terms
Actual Cash Value (ACV)
Actual Cash Value is the dollar amount your insurance company is required to pay you for a totaled vehicle. ACV represents the price you would pay to buy a comparable used vehicle of the same make, model, year, mileage, and condition in your local market — not the vehicle's original price, replacement cost, or what you still owe on a loan.
Salvage Title
A Salvage Title is a designation placed on a vehicle's title after it has been declared a total loss by an insurance company. Once a vehicle has a salvage title, it cannot be legally driven on public roads in most states until it is repaired and re-inspected, after which it receives a Rebuilt or Reconstructed title.
Constructive Total Loss
A Constructive Total Loss is a vehicle that is not physically destroyed but where the cost of repair plus salvage value exceeds the pre-loss value. Most total-loss declarations are constructive, not literal.
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