The fallout from major damage to your property, whether caused by a storm, fire or accident, is overwhelming. For homeowners dealing with the aftermath, it can be difficult to know if the property can be repaired or if it must be rebuilt from the ground up.
Determining whether an insurance claim results in a total loss depends on several factors and can substantially impact the path forward. If you suspect you may have a total loss on your hands, or if you believe your carrier has wrongfully denied a total loss, a Public Adjuster can be an invaluable ally.
A total loss in the insurance industry occurs when the cost to repair or restore your damaged property exceeds its actual cash value or the limit of your insurance policy (Liberto, 2023). In simpler terms, if fixing your property is more expensive than it's worth or than your policy covers, it might be declared a total loss.
Hurricanes and tornadoes are the most likely weather events to inflict catastrophic damage, costing property owners nearly $1.5 trillion in the U.S. since 1980 (Aceable, n.d.).
A total loss is typically triggered when severe structural damage occurs. If the property's foundation, walls, or roof are extensively damaged, repairs might be more costly than its value. If the repairs needed are so extensive that they will be close to or exceed the property's market value, insurers may opt for a total loss.
Older properties or those in poor condition before being damaged may be more likely to be deemed a total loss since their market value will be low. If the property's market value is low, moderate damage might lead to a total loss determination.
In addition, if the damage poses significant safety risks that are costly to mitigate, a total loss could be declared. Underinsured property owners might also find that repairable damage results in a total loss. That’s because, as mentioned, the insurer might declare a total loss if the repair costs exceed the policy limits.
In most states, including Texas, when a claim is declared a total loss, the insurance company must pay you the full policy amount minus any deductible (Casetext, 2023). For the policyholder, this can mean the opportunity to rebuild or relocate, depending on their personal preference and financial circumstances.
Since total losses require insurance companies to pay out the full policy limits in a settlement, insurance adjusters rarely deem a claim a total loss unless it is absolutely inarguable. If the loss is deemed partial, the insurance company can try to dispute the amount that should be covered.
They are often hesitant to declare a total loss as paying out the full value of the policy is not ideal for the carrier. Therefore, it’s not uncommon for them to push for repairs instead, even if the property is heavily damaged.
A Public Adjuster works to ensure that the extent of the damage is thoroughly documented and the repair costs are correctly calculated to counter these attempts to deny a total loss. It requires solid evidence that any damages an insurer deems salvageable with repairs actually require replacement or that the cost of repairs is higher than the insurance company’s estimates.
Public Adjusters may occasionally turn to specialty experts, such as fire investigators or engineers, to complete additional reporting, documentation, and damage evaluation.
Ready to find out how the team at Tiger Adjusters can step in to manage all aspects of your total loss claim, regardless of how complicated? Contact us today to learn more. Our Public Adjusters will work hard to settle your claim fairly and efficiently.
Aceable (n.d.). What Natural Disasters Cause the Most Damage to Homes. Retrieved September 23, 2024, from https://www.aceableagent.com/blog/what-natural-disasters-cause-most-damage-homes/
Casetext (2023, November 21). Tex. Ins. Code § 862.053. Retrieved September 30, 2024, from https://casetext.com/statute/texas-codes/insurance-code/title-6-organization-of-insurers-and-related-entities/subtitle-d-casualty-companies/chapter-862-fire-and-marine-insurance-companies/subchapter-b-insurance-coverage-provided-by-fire-and-marine-insurance-companies/section-862053-fire-insurance-total-loss-of-real-property
Liberto, D. (2023, September 3). Actual Total Loss: Definition, Valuation, Vs. Constructive. Investopedia. Retrieved September 23, 2024, from https://www.investopedia.com/terms/a/actual-total-loss.asp
