Are you an EPFL student looking for a semester project?
Work with us on data science and visualisation projects, and deploy your project as an app on top of GraphSearch.
Concept
Total loss
Summary
In insurance claims, a total loss or write-off is a situation where the lost value, repair cost or salvage cost of a damaged property exceeds its insured value, and simply replacing the old property with a new equivalent is more cost-effective.
Such a loss may be an "actual total loss" or a "constructive total loss". Constructive total loss considers further incidental expenses beyond repair, such as force majeure.
In a total loss, the insurer must indemnify the assured in full, and ownership of the insured item thereby passes to the insurer under the legal process of "subrogation". Although the policy determines the level at which the loss becomes total rather than partial, nevertheless the assured (and NOT the insurer) has the final say as to whether he wishes to make a partial or total claim.
If the insured item is, say, a car or a house, the policy will normally give it a "market value" which may be less than the assured had in mind; any disagreement would need to be challenged, perhaps using arbitration. In marine insurance, policies may be valued (where the value of the ship or cargo is agreed) or unvalued (where a market value at the time of the claim would need to be ascertained). In the absence of fraud, the Marine Insurance Act 1906 states the agreed value in a valued policy is conclusive, except in cases of constructive total loss, as in the Costa Concordia and The Bamburi.
Written off properties are usually demolished or torn down, scrapped, or recycled for parts after their policies are settled; so the insurer may be relieved not to have the insured item subrogated to him, as in Asfar v Blundell [1896].
Policies covering homes, vehicles, and other non-investment assets subject to depreciation may indemnify the insured to much less than the full replacement cost, so that the insured items may become "total losses" despite some residual value.
Auto insurance
Much of this section only relates to the insurance industry in North America. Other jurisdictions, for example Australia, have their own regulations.
Official source
About this result
This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.