Total loss insurance is essentially another name for Gap insurance.
What this means is that if you own motor insurance company decide that your vehicle is a total loss then your policy can spring into action.
In fact depending upon the level of total loss insurance you have chosen it can protect you from any financial shortfall, the depreciation of your vehicle in the form of return to invoice insurance and even the cost to replace your vehicle.
So when does your motor insurance company declare that your vehicle is a total loss?
No-one has the authority to declare your vehicle a total loss except your own motor insurance. This could happen when your vehicle is invloved in an accident and the cost of repairing the vehicle is no longer economically viable. The exact amount can vary from insurance company to insurance company but it is normally in the region of 50 % – 60 %.
For example your car is worth £10,000 and it is involved in an accident. To repair your car will cost £5500. In most case’s this will mean that your insurance company will decide to write your vehicle off and thence your total loss insurance can come into force.
Your vehicle can also be written off it is stolen. normally your insurance company will have a period of grace in which they hope that the vehicle will be returned but then after this period they will deem that it has now been stolen and not recovered. Again they will write your vehicle off, declare it a total loss and offer you a settlement.
In fact in most cases for your total loss insurance to be active your own insurance company simply have to agree to settle.