Actual Total Loss

What Does Actual Total Loss Mean?

An actual total loss refers to the complete destruction of insured property to the extent that it is utterly ruined, irreparably damaged, cannot be recovered, or is inaccessible to the owner. This type of loss typically results in a claim for the maximum coverage. Whether the claim is paid at all depends on the coverages on the policy, since liability-only insurance will not pay for damage to your own vehicle. The difference between comprehensive and collision insurance determines which kinds of total losses are covered.

Insuranceopedia Explains Actual Total Loss

In contrast to a partial loss, an actual total loss results in the owner essentially losing the property, as it is unrecoverable or unusable. For example, if a car being transported on a cargo ship sinks to the bottom of the ocean, that would be considered a total loss. When a vehicle is declared a total loss, the insurer pays the car’s value rather than repairing it, and the steps for receiving that payment are laid out in our guide to what happens when your car is totaled. When filing a claim for this type of loss, the policyholder must surrender all rights to the insured property in order to receive compensation for its maximum value. On financed vehicles, the insurance payout sometimes falls short of the remaining loan balance, which is the situation standalone GAP insurance is built to cover.