How Insurers Value a Total Loss
Your vehicle was badly damaged and the insurer is calling it a total loss.
An insurer generally treats a vehicle as a total loss when repairing it costs more than it is worth. Instead of paying for repairs, the payout is based on the car’s value just before the accident.
What decides the total loss call
The insurer compares the repair estimate with the vehicle’s pre-accident market value. No single fixed rule applies to every insurer, so the cut-off point varies.
An older vehicle has a lower value, so it reaches that cut-off sooner, even with moderate damage.
How the payout figure is worked out
The starting point is the vehicle’s market value just before the accident, based on its age, condition, mileage and comparable sales.[1] This runs as its own own damage claim, separate from any road accident claim for injury.
Where the salvage value fits in
Keeping the damaged vehicle instead of handing it over usually means a deduction. The insurer typically subtracts its salvage value, what the wreck itself is worth, from the payout.
What to check before accepting the figure
Ask how the pre-accident value was calculated. Compare it against genuine listings for similar vehicles of the same age and condition, and question a figure that looks low.
If the figure still feels wrong
Raise it with the insurer or its loss adjuster, with your own comparable listings as support. Put your reasoning in writing so there is a record.
Before you accept a settlement offer covers checking a figure before signing anything.
If the insurer will not move on a low valuation, an independent lawyer can take on the claim and deal with the insurer for you. Share general dates, location, case status and a short summary only for the first contact. Only after an identified lawyer or law firm contacts you and specifically requests the documents should you provide that identified lawyer or firm with the accident date, where it happened, the police report status, and the insurer’s written offer.
Need a lawyer to handle your injury claim?
For people seeking legal representation. For general information, please use our guides and tools.
Common questions
Who decides whether my vehicle is a total loss?
The insurer makes this call, usually based on a comparison between the estimated repair cost and the vehicle's value just before the accident, often informed by a loss adjuster's inspection.
Is the payout the same as what I originally paid for the car?
No. It reflects the vehicle's value just before the accident, accounting for age, condition and mileage, not the original purchase price, which is usually higher for anything but a very new vehicle.
What happens if I want to keep the damaged vehicle?
The insurer will generally deduct the vehicle's salvage value, what the wreck itself is worth, from the payout if you choose to keep it rather than hand it over.
Can I dispute the value the insurer has offered?
Yes. Comparable listings for similar vehicles of the same age and condition are a reasonable basis to question a figure that looks low, and raising this before accepting the offer is the right time to do it.
Sources
- Road Transport Act 1987, s.91 (Ministry of Transport) (accessed 2026-09-22)
Need a lawyer to handle your injury claim?
For people seeking legal representation. For general information, please use our guides and tools.