Governmental Committee explores total loss views from repairer, insurer and state perspectives

During the first themed meeting of the Collision Industry Conference (CIC), held last week in Philadelphia, a panel on how total losses are determined by law was held with input from repairer, insurer, and government perspectives.

Jill Tuggle, CIC Governmental Committee co-chair and moderator of the panel, said that typically, “total loss” describes the insurer’s treatment of a vehicle, while “salvage” describes how the state recognizes the vehicle.

“There’s no universal definition for each term, and every state makes its own definitions or uses different terms,” she said. “Each state has different rules for salvage vehicles.”

Tuggle relayed Virginia’s process as an example.

“Not all vehicles that total in Virginia end up with a salvage title, so this can lead to situations where insurance companies may be more inclined to total a vehicle because there are certain situations where they may end up with a clear title,” she said.

There are two main ways states and/or insurers determine total losses — by total loss threshold or a total loss formula.

Tuggle explained that the total loss threshold is when the cost to repair a vehicle is greater than a percentage of the vehicle’s actual cash value, and the total loss formula is when an insurer would lose more money repairing the vehicle than to pay the policyholder the ACV of the vehicle and selling it in its post-collision condition.

“In Pennsylvania, the insurer decides, and the percentage of the ACV doesn’t really matter,” she said. “The insurer makes the call at the end of the day. But one thing to note in Pennsylvania is that every total vehicle does get a salvage title.”

Stephen Madrak

Panelist Stephen Madrak, Pennsylvania Department of Transportation Bureau of Motor Vehicles director, added, “From our perspective, we look for a two-prong effect to make sure that both the insurance and the repair folks can move through the process efficiently to get the job done. And then the second part for us is to make sure the vehicles are tracked properly. Once they’ve been a total loss, they are denoted as a salvage vehicle, whether it’s inoperable or can be repairable. That gives consumer protection, at the end of the day, so that they know the history of that vehicle and whether or not it should be back on the road.”

When asked what outcomes total losses and salvage titling laws should aim to achieve, two panelists agreed that they should be safe repairs.

“Safe repairs, it’s all about the consumer,” said Max Keller, Conestoga Collision & Auto Body Repair owner and manager. “That’s who we should all be looking out for at the end of the day, just making sure that we’re putting everybody back in properly repaired vehicles, 100%.”

David Willett, SPARK Underwriters’ chief underwriting officer, added, “Safe repairs, that’s the whole idea of it, and why it was originally out there. …I think that empty chair [the consumer] over there, that’s the main purpose.”

David Willett

According to Willett, repairers should take more of a major role in total loss determinations than they do, playing offense rather than defense. But they’re not the only ones who should play a bigger role, he said.

“I think the OEs have an opportunity to play a bigger role in coming up with total loss procedures or repair,” Willett said. “They’re coming up with how to repair a car, shouldn’t they be coming up with how to [determine] total loss of a car? …I know it’s rethinking and maybe causing challenges for people because it is a great shift, but it just seems like, to me, that there ought to be more reliance upon the engineers of the OEs and the OE-certified repairers in making that determination.”

He made the suggestion, in part, because there are vehicles being totaled that could be repaired, based on repairers’ expertise, or vehicles are being repaired with a negative effect on their titles, he said.

“It just seems like, to me, that we’re missing an opportunity to use the expertise and the role knowledge,” he said. “I realize it’s not an easy switch mentally to make, but I believe that for the betterment of our industry, that’s something that should be explored.”

In Pennsylvania, insurance companies and repairers denote whether a total loss is inoperable or repairable, Madrak said.

“If it is salvaged but still repairable, then we have a process where the consumer, whether it’s the person that had the total loss and owned it initially or sold and repaired, it can go through the reconstructive process,” he said.

He added that Pennsylvania has an enhanced safety program that ensures repaired vehicles that were once deemed total losses are roadworthy and their titles are properly branded.

Keller said over the last few years, he’s seen total loss determination rates trending upward. Whether newer vehicles are totaled or not is 50/50, with half being very repairable and the other half not roadworthy.

Max Keller

“Some are more surprising than others based on the equation, higher salvage bids from the salvage companies, and obviously, more expensive repairs are coming along when we’re seeing headlights worth six or $7,000, and cars that are aging out… A lot of our higher-end insurance companies in the state may decide to total loss a vehicle at 50, 60, or 70% just as a rule for them in particular. Other insurance companies are usually seeing the cost of the repair hit 70 or 80% before they’re running that formula.

“But then we have a handful of insurance companies that’ll just let the repair cost 110, 120, 130% of the repair… We see that all the time with a handful of insurance companies and one of the biggest ones hitting 130-plus percent every day on cars that we’re comfortable repairing of course. It might be six or seven years old, or have sensors and ADAS and electronics, or expensive headlights that are making it hit that number, but definitely nothing unsafe.”

Nationwide, Willett said every element in the total loss equation is going in the wrong direction, including the increased cost to repair vehicles stemming from new technology.

“New technology really means you’ve got to have more technically talented, trained individuals to do it,” he said. “And some of the tools and repair procedure costs and the labor necessary for talented individuals to do that are up. We’ve seen that a disproportionate share of that occurs in metropolitan areas.”

When it comes to notifying customers that their vehicles are total losses, Keller said insurance companies beat his shop to the punch.

“The insurance companies are beating us to that conversation of the actual decision because they’re doing it from their office or car before we’re actually even notified,” he said. “We try to let them know that there’s a chance that it’s going to be a total loss and prepare them for that conversation; how to handle it, and give them suggestions on working out the value, whether it’s with a consultant or just doing the research on their own.”

When asked for advice on behalf of other states about how to get regulatory changes made without legislation, Steve said he isn’t sure about other states, but in Pennsylvania, the regulatory process is, in many cases, far more difficult than a law change.

“Our regulatory process is long and complicated and cumbersome,” he said. “So if we attempt to make regulation changes, it can take us a couple of years as opposed to a law change, which can happen fairly quickly.”

During the Q&A portion of the discussion, Jeff Butler, with Haury’s Collision and Washington Independent Collision Repair Association (WICRA) past president, asked Willett how policyholders can effectively push back when they disagree with their carrier’s decision to total their vehicles, and how shops can advocate on behalf of their customers.

Willett responded that several states have made headway, including effective action in Washington and Texas with right-to-appraisal laws, to help consumers in that area, but more initiatives are needed.

“There’s times that it gets painted just strictly as somebody not trying to be reasonable, or somebody trying to look solely after their profits,” he said. “I don’t think that everybody is necessarily believing that point. It’s just that there is a system in place that has been growing that makes it more economical for them to do that. And until there is pushback, or somebody says something different, I think it’ll continue.”

Ken Weiss, Empire Auto Parts industry relations representative, and Aaron Schulenburg, Society of Collision Repair Specialists executive director, distinguished economic total losses from repairable total losses.

“As long as insurance pays such a large part in the repair industry, they are not going to increase repairing more cars that are economically not worth it,” Weiss said. “A lot of cars are getting totaled out, I believe personally, at lower thresholds because there’s the fear of the supplement. So it’s 60% if the typical supplement’s going to be 25%, these cars are going to get totaled out on an economic basis. And if we repair cars above thresholds, if we raise the threshold and require cars to be repaired at a higher threshold, we’re probably going to see another additional increase in insurance premiums, and that’s not good for the industry.”

Schulenburg said the difference is, on one hand, an economic total loss, and on the other, totaling a vehicle because it economically benefits the party paying for it.

“Those are not the same thing,” he said. “Economic total loss is when it exceeds the threshold or when it’s not worth it… I think there are a lot of trends that are emerging where consumers are ending up in a situation where they’re not. And I think for some carriers, they’re starting to put more emphasis on what is the consumer’s desire? What does the consumer want in this situation and how do we prioritize that and come up with a conclusion? I think that’s a totally different scenario than it doesn’t matter what the consumer wants, we’re going to total it because it makes sense for us.”

Schulenburg also asked a question on behalf of Tom Bub, with Gerald’s Auto Body in Tennessee:

“Lately, it seems insurers are totaling vehicles before they reach the normal 75% threshold we generally work under. In the last six months, we have had three cases in which the insurance company has deemed three different vehicles a total loss before they reach that 75%, even after a thorough teardown. I understand that the insurance companies can determine a total loss when they see fit, but this does raise a few
concerns for us on behalf of our customers and our shop. How do we protect our customers when these instances occur, and they do
not want their vehicle to total? In our experience with them, the customer’s opinion has not been taken into account.

Also, how do we protect the workflow of the shop when these vehicles are pulled out or have to be rebuilt for the customer to retain them? This is not an issue we have really ever seen before, and we have a genuine concern that this will continue to trend upward with our operations if we can’t find some way to alleviate it. Even getting some ideas on protecting our customers and ourselves in these situations would be helpful.”

In response, Tuggle recommended shops reach out to either their local association or local lawmakers as well as state departments of insurance.

“Sometimes just bringing up these issues, you can make effective change,” she said.

Willett said if it isn’t obvious that the vehicle damages will be above 75% then there should be pushback.

“I’ve seen instances where it is obvious and there’s people that are continuing to run the clock,” he said. “What that ends up doing is increase the cost of the claim settlement. And that does get factored into increased costs that, in my opinion, are unnecessary going forward when it’s obvious that you have a statute that is going to be applied.”

Images

Stephen Madrak, Max Keller, and David Willett speak during the July 23, 2025, CIC Governmental Committee’s panel discussion. 

All photos taken by Lurah Lowery/Repairer Driven News