Total Loss Threshold

Also known as: TLT, total loss formula

The Total Loss Threshold is the percentage of a vehicle's pre-loss value at which an insurer must declare it a total loss. Thresholds are set by state law (statutory) or insurance company policy (contractual) and typically range from 65% to 100%.

More detail

Statutory total-loss states include Texas (100%), Iowa (50%), and many others — see the per-state pages for specifics.
Some states use a 'Total Loss Formula' (TLF) — repair cost + salvage value > pre-loss value — instead of a fixed percentage.
Even when a vehicle is repairable, an insurer may declare it a total loss if doing so is cheaper than repair.
If your vehicle has a salvage or rebuilt title, the insurer's valuation may also include a salvage/rebuilt-title adjustment of 20-40% off the otherwise-comparable value. The high end of that range is often unsupported by salvage-titled comps in your local market.

Related terms

Actual Cash Value (ACV)

Actual Cash Value is the dollar amount your insurance company is required to pay you for a totaled vehicle. ACV represents the price you would pay to buy a comparable used vehicle of the same make, model, year, mileage, and condition in your local market — not the vehicle's original price, replacement cost, or what you still owe on a loan.

Salvage Title

A Salvage Title is a designation placed on a vehicle's title after it has been declared a total loss by an insurance company. Once a vehicle has a salvage title, it cannot be legally driven on public roads in most states until it is repaired and re-inspected, after which it receives a Rebuilt or Reconstructed title.

Constructive Total Loss

A Constructive Total Loss is a vehicle that is not physically destroyed but where the cost of repair plus salvage value exceeds the pre-loss value. Most total-loss declarations are constructive, not literal.

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