Total Loss Claims Skyrocket As Vehicle Technology Advances

Earlier in my career I handled a subrogation case involving a brand-new vehicle which was lightly tapped from the rear by a careless driver.

The damage to the vehicle was very minimal, yet the vehicle was declared a total loss by my client because its frame had been ‘jiggled’ and the cost to repair the frame, together with the diminution in value of the vehicle after successful frame repair and increased salvage value exceeded the actual cash value of the vehicle.

While frame damage can be repaired, it almost always will be weaker and contain more structural insecurities than before the collision.

I thought the case to be an extreme outlier, but in more recent years, insurance companies have been facing not only increased costs of repairs due to the rise in vehicle complexity, but also more vehicle total loss claims.

The increase in total loss claims is playing a key role in the rise of auto insurance premiums. Together with the overall rise in the cost of doing business, labor shortages, supply chain disruption, and inflation--which are being experienced across all industries and areas of business--a sharp rise in the cost of total loss claims has become a key contributing factor in sky-rocketing auto insurance rates.