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NA
USA
114 Posts |
 Posted - 09/12/2002 : 21:44:26
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KileAnderson
USA
875 Posts |
Posted - 09/12/2002 : 22:28:43
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Maybe I'm missing something suttle here, or perhaps I don't understand where you're heading with this.
A total loss when you're talking about a car is when the cost to repair the vehicle comes close to or surpasses the actual value of the vehicle. When talking about a structure it's roughly the same when it becomes more expensive to return the structure to it's pre-loss condition using the remaining standing structure as a starting point than it would be to rebuild from the ground up then the structure is totaled. |
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CCarr
Canada
1200 Posts |
Posted - 09/12/2002 : 23:38:15
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Jim, you have brought forward one of the most contentious and troubling issues facing carriers.
On the auto side, certain coverage, financial and legal issues, in the past few years; have made the determination of a total loss more difficult.
Coverage wise, there has been the introduction of the "Waiver of depreciation endorsement", an economical way to purchase RC on your new / newer vehicle; and the endorsement is available for 3 years therefater. Corporations have been formed to serve the insurance industry for a fee, to take away yet another function of an adjuster; specializing in LKQ - RC.
Financially, co-incidental with the above, it is not as simple any more as saying a total loss exists when the cost to repair the vehicle comes close to or surpasses the ACV of the vehicle. Salvage value, widely done by contract in the last 20 years, as opposed to open bidding, has now become a predetermined valye. Salvor contracts vary by carrier and are very competitive, but generally either approach it on a set amount basis - per manufacturer, model and year; or other auto salvors venture to promise to pay "x" percentage of the established ACV figure. Either way, insurers know the "salvage value" of their personal auto book of business.
Therefore, in determining if a damaged unit is a total loss, the known salvage amount is considered in the process. Factored into that thought process is the reduced or eliminated need for Loss of use coverage payment.
Legally, the whole system is going to hell in a hand basket. Diminished value class action suits / awards are making total loss settlements look more attractive. However, class action suits are also now ongoing with regards to who owns the "wreck"; and hence who should plunder the salvage money.
So, I think the auto side of total loss determination is quite a nightmare.
On the property side, I think it is equally gray, dark and unclear. I know carriers are always closely monitoring ALE dollars spent and dollars at risk per loss. There is always considerable concern that an extensive repair / reconstruction job would / could take longer than knocking it down quickly to the foundation (if it is re-useable) and giving a contractor an accellerated contract.
Further, there is the prevailing issue of ACV, and how long it will take the insured to elect to repair and exercise their RC rights.
I don't think your question is simple. Be it auto or property, it is a major concern for carriers and their is no functional textbook answer. Each loss where extensive damage exists must be pro-actively studied on its' own merits and set of circumstances, to determine whether it should be made a total or not. |
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KileAnderson
USA
875 Posts |
Posted - 09/13/2002 : 09:49:59
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| In the south in general, labor rates are lower than in the north so it would take more damage to total a car in the south than it would in the north. Labor rates also vary from state to state and even regionaly. Last I checked , body shop labor rates in San Antonio were less than the rates for the same work in Dallas, so you could have a total loss in Dallas that would be a repairable loss in San Antonio. Is that what you're getting at? |
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CCarr
Canada
1200 Posts |
Posted - 09/13/2002 : 10:17:10
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With regard to total loss versus constructive total loss, I defer to my trusty tool box of claims aids - my favorite online dictionary - Rupp's Insurance & Risk Management Glossary, that others may wish to add to their resource base of materials and with a few clicks can see the two definitions on one page; and reasonably draw the difference.
Go to www.nils.com/rupps |
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The Total Loss
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