Total loss & diminished value

When the estimated repair cost, plus the supplements that are likely to follow, approaches a set proportion of what the car was worth immediately before the collision, the insurer settles instead of repairing.

It is arithmetic rather than an opinion about the car, which is why it can feel so abrupt. A car that looks repairable to you can be a total loss on paper, and a car that looks destroyed can be worth repairing if it is valuable enough.

A car that has been in a recorded collision is generally worth less afterwards than an identical car that has not, even when the repair was performed exactly to specification. That difference is diminished value.

It is real, it is routinely not mentioned to consumers, and whether you can recover it depends heavily on whose policy is paying and on the facts. A first-party claim on your own policy and a third-party claim against the driver who hit you are different situations.

An owner retained salvage settlement — where the insurer settles the total loss and you keep the vehicle — is sometimes possible. The settlement is reduced by the salvage value, and the title is usually branded, which affects what the car can later be sold for and sometimes what it can be insured for.

It can be the right answer, particularly for an older car with a localised impact. It is rarely the right answer made in a hurry.