Total Loss
Definition:
When property is damaged beyond repair or the cost to repair exceeds its value.
Explanation:
A total loss results in the insurer paying either the actual cash value or replacement cost, depending on the policy.
Example:
If a fire destroys your entire home, leaving nothing salvageable, it is considered a total loss.
Why it matters:
This term affects how claims are handled and what payout a homeowner may receive.