When an accident or disaster strikes, one of the first things you'll need to do is file an insurance claim. Part of that process will involve your insurer determining whether or not your home is a total loss.
Understanding the difference between a partial and total loss is important, as it can affect your insurance coverage and settlement. Here's what you need to learn about partial and full losses:
In the insurance industry, a "partial loss" is defined as physical damage to a home where the repair cost is less than the actual cash value (ACV) of the property before it was damaged.
For example, if your basement incurs water damage and has an ACV of $20,000 but will only cost $15,000 to repair, it would be considered to be a partial loss.
A "total loss" is defined as physical damage to a home where the cost of repairs equals or exceeds the ACV before it was damaged. For instance, if your home has an ACV of $200,000 but costs $250,000 to repair, your residence would be considered a total loss.
If your home is determined to be a total loss, your insurer will usually offer you a settlement equal to its ACV.
However, if you disagree with your insurer's determination or settlement offer, you have the right to retain a public adjuster to help you file a claim. Public adjusters can help you get the settlement you deserve.
No one wishes to file an insurance claim, but knowing the process can help make it less stressful. The processes for filing partial or total loss claims are similar, but there are a few key differences.
If you have a partial loss, you'll need to submit a detailed estimate of repairs along with your claim. Your insurer will then review the assessment and determine if it's fair. If it is, they'll approve the repairs and send you a check for the amount of your loss.
However, if you incur a total loss, you'll need to submit a detailed inventory of your damaged home. Your insurer will then review the inventory and determine the ACV of your property. Once they've done that, they'll send you a check for the amount of your loss.
There are several benefits that come with each type of claim.
With a partial loss claim, you get to repair your home and don't have to go through the hassle of replacing it.
On the other hand, with a total loss, you get a check for the full ACV of your home. You also don't have to worry about making repairs.
There's no easy approach to choosing between a partial loss claim and a total loss claim. Ultimately, it boils down to what makes financial sense for you.
A partial loss claim is probably your best bet if your home is damaged but can be repaired relatively inexpensively.
However, if your home is so badly ruined that it would cost more to repair than it's worth — a total loss claim is probably your best option. Of course, this is just a general overview of partial and complete losses.
If you reside in Florida and your home has suffered damage, public adjusters can help you file a claim. Don't attempt to navigate the insurance claim process alone.