What is the distinction between a “total loss” and a “partial loss”?

A total loss refers to a situation where an insured item, such as a vehicle or property, has suffered damage so extensive that it is deemed completely unsalvageable or has no remaining value. In such cases, the insurer pays the policyholder the full insured value of the item. On the other hand, a partial loss occurs when the item still has some remaining value despite suffering damage; it is repairable or recoverable to some extent. This distinction is crucial in insurance because it determines the amount of compensation an insured party receives.

Understanding this division helps both insurers and policyholders in settling claims accurately, capturing the nuances of the valuation process in different loss circumstances.