Total loss terminology

November 4, 12:10 PMAlaska Transportation ExaminerGeorge Angus

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If your car has been declared a total loss by the insurance company you need to become familiar with the terminology that the insurance adjuster is going to use.  Some insurance adjusters are very adept at informing and educating as you go through the process.  Others may not be quite so user-friendly.

Here are some of the most common terms you are likely to encounter:

• Total Loss - Technically this means that it would cost more to repair your car than what it's valued at.  Keep in mind the insurance company will consider all of the costs of the claim when determining this including any car rental charges.
• Salvage - When your car is a total loss, the insurance company may take ownership and sell the vehicle at an auction to try and recoup some of the costs.  When they do, your car is a salvage vehicle.
• Salvage Fee - If you decide you want to keep your total loss vehicle, the insurance company will charge you a salvage fee.  Typically this is about 15% of the Actual Cash Value of the vehicle.  The insurance company charges this because if you are going to keep the vehicle then they won't have the chance to try and recoup some of the costs at auction.
• Actual Cash Value - Fancy terminology for what your car is worth in a specific geographic market.
• Buy Back - The same thing as a Salvage Fee for an owner retained vehicle.
• Depreciation - The incremental decrease in the value for certain items on your car such as aftermarket items and tires.
• Endorsements - Additional coverages to your policy for things like upgraded stereos and aftermarket tires and rims.  This is critical!  If you add anything to your car that may increase the value then you must call the insurance company and have those items put on your policy.  If you don't do this, the insurance company will not pay you for those items.  Also, without exception get the name and extension of the person you speak with when you call in for an endorsement.  Request an immediate fax of the endorsement policy documents.  Do not trust that your phone call added the items to your policy.  Follow Up!!!
• Book Value - Generally refers to Kelly Blue Book or NADA.  Don't expect your insurance company to use these values.  The insurance company will get a local market value, usually through the services of a third party provider.

These are the most common terms that you are likely to hear.  My best advice is this:  If your insurance adjuster uses terminology you don't understand, then ask, ask , ask.  It's important for you to be on the same page as the adjuster to protect your financial interests.