Total Loss

In insurance, a total loss happens when the cost to repair or replace damaged property is more than its worth. In these cases, the insurance company will usually decide the property is a total loss and pay the person with the insurance (the policyholder) the full amount the property was insured for, minus any agreed-upon amount the policyholder pays first (deductible).

Different regions might have slightly different ways of calculating the value of the damaged property. For instance, in the United States, the value is often determined by considering the actual cash value (ACV), which is the current market value of the property, taking into account any decrease in value due to age, wear and tear, and other factors.