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Totaled

Totaled

Overview

Totaled (shorthand for total loss) is a term used in the insurance
Insurance
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known...

 industry. In the US, when a vehicle
Vehicle
A vehicle is a mechanical means of conveyance, a carriage or transport. Most often they are manufactured , although some other means of transport which are not made by humans also may be called vehicles; examples include icebergs and floating tree trunks.Vehicles may be propelled or pulled by...

 is damaged and the cost of repairs and the salvage value combined would exceed the current value of the vehicle, the insurance company may declare it totaled. Generally, the insurance provider will only pay out the lesser cost of buying a replacement vehicle, instead of paying to repair the old one to its previous state.

In the UK, a car in this condition is called a write-off
Write-off
The term write-off describes a reduction in recognized value. In accounting terminology, it refers to recognition of the reduced or zero value of an asset. In income tax statements, it refers to a reduction of taxable income as recognition of certain expenses required to produce the income...

.
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Encyclopedia

Totaled (shorthand for total loss) is a term used in the insurance
Insurance
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known...

 industry. In the US, when a vehicle
Vehicle
A vehicle is a mechanical means of conveyance, a carriage or transport. Most often they are manufactured , although some other means of transport which are not made by humans also may be called vehicles; examples include icebergs and floating tree trunks.Vehicles may be propelled or pulled by...

 is damaged and the cost of repairs and the salvage value combined would exceed the current value of the vehicle, the insurance company may declare it totaled. Generally, the insurance provider will only pay out the lesser cost of buying a replacement vehicle, instead of paying to repair the old one to its previous state.

Regional


In the UK, a car in this condition is called a write-off
Write-off
The term write-off describes a reduction in recognized value. In accounting terminology, it refers to recognition of the reduced or zero value of an asset. In income tax statements, it refers to a reduction of taxable income as recognition of certain expenses required to produce the income...

. This term is an accountancy term. The consequence of the 'written down value' becoming zero. This means the value of the car is now worthless, therefore it cannot be included in the accounts. It is written-off. However, it is worth noting that although a car has been totaled, it is not truly worthless, in that usually it will still contain salvageable used parts, or at a bare minimum still have value as scrap metal.

Write-offs can be distressing for the owner as the amount offered by the insurance company is normally its "market value" at the time. If the car was rare, or simply in excellent condition compared to others of its age and type, the market value may not allow the owner to purchase an identical vehicle. For this reason, many insurers offer "agreed value" cover for owners of classic vehicles, which guarantees a set financial sum in the event of a total loss. There is normally a rule that the vehicle must be at least 10 (or 15) years old for mass-market models, although for specialist cars, such as Ferraris, agreed value cover may be available from an earlier age.

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