Total Loss and Diminished Value Flashcards

Under a total loss formula (TLF) state, a vehicle is declared a total loss when which condition is met?

Answer: Cost of repair plus salvage value equals or exceeds the actual cash value

TLF states compare repair cost plus salvage value against the pre-loss ACV.

A vehicle has an ACV of $20,000, a repair estimate of $13,500, and a salvage bid of $7,000. Under a total loss formula, what is the result?

Answer: Total loss, because $20,500 exceeds the $20,000 ACV

$13,500 + $7,000 = $20,500, which exceeds the $20,000 ACV.

Which state uses a 100% total loss threshold, meaning repairs must equal or exceed ACV before a vehicle is totaled?

Answer: Texas

Texas uses a 100% threshold, while Florida is 80%, Iowa 70%, and Oklahoma 60%.

When an owner keeps a totaled vehicle (owner-retained salvage), how is the settlement typically calculated?

Answer: ACV minus the salvage value and any deductible

The insurer deducts the salvage value it would have recovered, along with the deductible.

In a comparable-vehicle valuation report, why are adjustments made to comparables?

Answer: To account for differences in mileage, options, and condition versus the loss vehicle

Adjustments align each comparable with the loss vehicle's specific attributes.

Which type of diminished value refers to the loss in market value simply because the vehicle now has an accident history, even after perfect repairs?

Answer: Inherent diminished value

Inherent DV results from the stigma of an accident history regardless of repair quality.

Which document would most strongly support a buyer-perception argument in a diminished value claim?

Answer: A vehicle history report showing the reported accident

A history report showing the accident is what prospective buyers see and react to.