What does a total loss vehicle mean?
3 Answers
A total loss vehicle refers to an insured vehicle that is completely destroyed or severely damaged to the point where it has no repair value, and the insurance company will declare it as a total loss. After obtaining approval from the insurance company, total loss vehicles can be traded. The disposal method for such vehicles typically involves auctions, and most total loss vehicles end up in the used car market. In cases where the insured object is not completely destroyed and can be repaired or recovered, but the cost of doing so would exceed the value of the salvaged object, making it not worthwhile, the insurance company may abandon further efforts and compensate the insured with the full insurance amount, which is known as a constructive total loss. According to Chinese law, vehicles that have reached their scrapping age must be scrapped, meaning they are legally prohibited from being driven on the road.
I once experienced a major accident where my car was severely damaged. After the insurance company assessed it, they declared it a total loss. Basically, the car was too badly damaged, and the repair costs were too high, exceeding the car's actual value, or it simply couldn't be safely repaired. At that time, the estimated repair cost for my car was 150,000, but the car was only worth about 100,000, so they just paid me out instead of repairing it. Total loss vehicles usually can't be repaired and driven on the road; the risks are too high, as the frame might be deformed or there could be hidden issues. When handling such cases, the insurance company will compensate you based on the current market value, and the car is scrapped. If you're buying a used car, be careful not to end up with one of these refurbished total loss vehicles. They might be cheap, but the failure rate is extremely high. Always check the vehicle history report before buying a car to avoid total loss vehicles.
I just got my driver's license not long ago. During driving lessons, my instructor mentioned the term 'total loss vehicle.' Now I understand it refers to a car that's so severely damaged in an accident that the insurance company deems it more cost-effective to pay out rather than repair. For example, if a car is worth 60,000 yuan but repairs would cost 70,000 yuan or the structure is completely damaged, they declare it a total loss. After that, the car is scrapped and can no longer be driven to prevent accidents. This is quite important for new car owners because if an accident results in a total loss, they need to promptly communicate with the insurance company to get compensation. When buying a used car, be wary of sellers hiding this history. Refurbished cars may look good on the surface, but problems emerge after driving for a while, compromising safety. Checking the vehicle's maintenance records can help avoid being scammed.
