Total-Loss
8 min read
The anatomy of a total-loss settlement letter
Section by section, here is what a typical settlement document usually contains.
Why the letter exists
When repair plus salvage exceeds a vehicle's actual cash value, insurers commonly declare a total loss. The letter documents the calculation and the amount the carrier proposes to pay.
The comparables section
Most settlement letters include a valuation report with comparable local listings. Each comparable is usually adjusted for mileage, options, and condition. Reading these line items helps you understand how the final number was reached.
Loan payoff and remaining balance
If the vehicle is financed, the settlement is typically routed to the lender first. Any difference between the settlement and the loan payoff is sometimes referred to as gap exposure and is handled separately from the policy itself.
Informational only. This article is published by Worthy DriveAuto for general educational purposes and does not constitute insurance advice, a quote, or a solicitation.
