What is considered to be a “total loss” for insurance purposes?

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What is considered to be a “total loss” for insurance purposes?

I have $64,174.59 worth of damages to my home but my policy is $75,200 (on my dwelling). Should it be a total loss or partial loss?

Asked on October 7, 2012 under Real Estate Law, Tennessee

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Custom and practice in the insurance industry with respect to casualty matters the term "total loss" unless defined within the policy differently means that the costs of repair exceeds the current fair market value of the item damaged.

Example: Blue book value of a given car is $6,000 that is damaged. However, costs of repair are $8,300. The costs to repair exceed the car's present value. The car is a total loss. The property owner gets $6,000 if there is an applicable policy of insurance for the loss.


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