After a passenger is involved in an unfortunate accident, we often hear that the car is totaled. However, we rarely hear that a house is totaled after the damage is done to the property. Why do insurance companies total cars but not houses? Keep reading this article as we discuss the question, ” do insurance companies declare total losses for homes?” 

Although there are differences in insurance companies considering settlement losses for a house and a car, a home can also be regarded as a total loss. The contractual distinction, along with the recurrence of substantial losses, is likely at the reason why consumers don’t hear that a house is totaled.  


  • Loss settlement Clauses:
    • Auto insurance policies typically pay the Actual Cash Value (ACV) after a loss.
    • Actual Cash Value settlement pays the lesser of the:
    1. Actual Cash Value -or- (in practice = current market value)
    2. The amount necessary to repair or replace with a vehicle of like kind and quality.
  • Except for a small percentage of agreed value and stated value policies, physical damage on auto insurance contracts does not state a “limit” of coverage.
  • A vehicle is considered “totaled” when:
    • The cost to repair the vehicle exceeds its Actual Cash Value (market value)


Totaling a vehicle happens more often than a home. Cars are moving objects that collide with objects or other vehicles. The distinction between cars and a house results in more repair costs than the car is valued at, declaring the vehicle a total loss. 


  • Loss settlement provisions:
    • Houses are insured with a variety of loss settlement stipulations. Types of loss settlement options typically found in homeowners policies include:
    • In insurance, a home is declared “totaled” any time the cost to repair is higher than the limit of insurance.
  • The property a house is built can significantly influence its assessment.
  • Many homes today are insured for their Replacement Costs, and with a suitable amount of coverage, most homes can be rebuilt – even if significantly destroyed.
  • A total loss to a home is a less common occurrence than with a vehicle.


Due to substantial replacement cost settlement requirements, a much lower recurrence of total losses, and land values, the circumstance where a customer would rate a home as “totaled” are few.

When significant damage is done to a home, typically the first thing a policyholder does is contact the insurance company. The insurance company will send their general adjuster to your property for an assessment of loss. The adjuster that your insurance company uses works for the insurance company and will report the minimum amount of damages. However, we suggest consulting with a public adjusting firm that can maximize your payout and works on your behalf. If you are currently dealing with an insurance claim to your home or business, please contact us to determine if our services will benefit you and your property insurance claim.