10 Mins read
Copied!
When is a car considered a “total loss” in the Philippines? Find out how insurers decide when damage is too costly to fix, what it means for your payout, and how to avoid surprises after an accident. Whether your car was wrecked, flooded, or stolen for good—here’s what really happens next.
After a major accident or severe flooding, one of the first—and toughest—questions many car owners face is: “Will my insurance still cover the repairs, or is my vehicle already considered a total loss?”
In the Philippines, a total loss car isn’t just about how bad the damage looks. It’s a numbers game—specifically, the car repair costs versus your vehicle’s fair market value (FMV). If the estimated repairs exceed 75% of your car’s FMV, your insurer may declare it a constructive total loss, as outlined by the Insurance Commission of the Philippines.
With more Filipinos filing car insurance claims due to rising flood levels, collisions, and unpredictable weather (especially during typhoon season), understanding how total loss in car insurance works has become essential—not just for owners of old or high-mileage vehicles, but for anyone with a car on the road today.
In this guide, we’ll break down:
The different types of total loss scenarios (not just from accidents!)
How insurers calculate FMV vs repair cost
What really happens when your vehicle is declared a total loss
Key tips to avoid delays or issues when filing your car insurance claim
Understanding Car Insurance Coverage in the Philippines
Get to know the basics—what’s covered, what’s not, and why it matters.
Crash Course: A New Driver's Guide to Handling Car Accidents
From first steps after a collision to filing a claim, this guide has you covered.
CTPL Car Insurance: Coverage, Benefits & Exclusions
Learn what’s required by law, what CTPL actually protects, and where it stops.
Now that we’ve covered the basics, let’s dig into what really determines when a damaged vehicle is no longer worth fixing—and when it officially becomes a “total loss.”
Not every wrecked or damaged car ends up as a “total loss.” In fact, some vehicles that look repairable are still written off by the insurance company. Why? Because when it comes to car insurance in the Philippines, it’s not just about the visible damage—it’s about the numbers.
If your car was flooded, involved in a crash, or even stolen and never recovered, you might be thinking, “Kaya pa ’yan ipaayos.” But your insurer may see it differently, especially if the cost to repair your car is more than what it’s actually worth on the market. That’s when it’s classified as a total loss.
But not all total losses are the same. Some are obvious write-offs, while others are more technical in nature. Here’s how insurers in the Philippines typically classify them—and what it means for your car insurance claim.
Let’s bust a common myth: not all total loss car insurance claims come from major accidents. In the Philippines, your vehicle can be declared a total loss under any of these three main scenarios:
Type of Total Loss |
Description |
|---|---|
Actual Total Loss (ATL) |
The car is completely destroyed and beyond any possibility of repair. |
Constructive Total Loss |
The cost of repairs exceeds a certain percentage of the car’s fair market value—usually 75%. |
Total Loss Due to Theft |
The vehicle has been stolen and remains unrecovered after a set period of time. |
Did you know? Constructive total loss is the most common type of claim in the Philippines, especially during typhoon and flood season when vehicles suffer severe water damage.
So, how do insurance companies actually determine if your car qualifies as a total loss? Let’s break down the process they follow.
So, how do insurance companies actually decide when a damaged car is no longer worth fixing?
Most car insurance providers in the Philippines use a simple benchmark:
If the cost of repairs (including parts and labor) exceeds 75% of your vehicle’s Fair Market Value (FMV), your car may be declared a constructive total loss.
Here’s how that works in real life:
Your car’s FMV is ₱600,000
The repair estimate is ₱480,000
₱480,000 is 80% of ₱600,000 → that’s over the 75% threshold therefore, your car is a constructive total loss.
But it’s not just the repair quote that determines it. A formal damage assessment must be conducted—usually by an accredited adjuster or service center—to officially declare the vehicle a total loss under your car insurance policy.
Knowing how this calculation works can help you manage expectations and better understand your motor insurance claim.
It’s not up to you or your neighborhood mechanic. A licensed claims adjuster, assigned by your car insurance provider, is responsible for making that call.
Here’s how the process usually works:
The insurer reviews the damage
They determine your vehicle’s current Fair Market Value (FMV)
A repair estimate is prepared, including labor and parts
If the repair cost exceeds 75% of FMV, the adjuster recommends a total loss classification
Important: If you believe the assessment is too high or inaccurate, you’re within your rights to request a second opinion or ask for a review of the adjuster’s report.
Once your car is officially declared a total loss, your car insurance claim moves into the next phase—payout, documentation, and vehicle turnover. Let’s walk through what happens next.
Once your car is officially classified as a total loss by your car insurance provider, here’s what typically happens next in the claims process:
Step |
What It Means |
|---|---|
Payout Evaluation |
You’ll receive the Fair Market Value (FMV) of your car, minus any deductibles or depreciation. |
Retention Option |
In some cases, you may have the option to buy back the salvaged vehicle, often for spare parts or resale. |
Insurer Takes Ownership |
The insurance company takes possession of the damaged car, usually for auction or disposal. |
Policy Ends |
Once the payout is made, your car insurance policy is considered fulfilled for that vehicle. |
Disclaimer: The actual claims process, payout amount, and post-claim options may vary based on your insurance company, policy type, and specific claim findings. Always check your policy or talk to your agent for personalized guidance.
At the heart of your payout is the Fair Market Value—let’s unpack how it’s actually computed.
When it comes to total loss claims, your payout isn’t based on how much you originally paid for the car—it’s based on its Fair Market Value (FMV) at the time of the incident. That’s the amount your vehicle would reasonably sell for today, considering its age, usage, and condition.
To determine FMV, most Philippine car insurance companies look at several key factors:
Current market prices for similar vehicles (same make, model, year, and variant)
Dealer listings and valuation tools
Depreciation tables, which typically reduce a car’s value by 10–15% per year
Disclaimer: FMV can vary slightly depending on the insurer. Many follow valuation methods aligned with the Philippine Insurance and Reinsurance Association (PIRA) guidelines, but it’s always worth checking how your provider calculates it.
And if you’re still financing your car through a loan? The FMV becomes even more crucial. In some cases, your insurance payout may not fully cover the remaining loan balance, especially if the vehicle has depreciated significantly. That’s why understanding FMV and regularly reviewing your car insurance coverage is important for protecting your finances.
If your car is financed and gets declared a total loss, the situation can get a bit complicated, especially if your insurance payout doesn’t fully cover what you still owe the bank.
Scenario:
You owe ₱400,000 to the bank
Insurance payout is ₱350,000
You’ll still need to cover the ₱50,000 shortfall
In this case, even though your insurer pays for the total loss, you are still responsible for covering the remaining ₱50,000. This is why many financial advisors recommend considering GAP insurance or a policy with loan balance protection, if available.
Cause |
Example |
|---|---|
Collision |
Major crash involving multiple vehicles or a severe front impact |
Flood Damage |
Car submerged during typhoons or monsoon season |
Fire |
Caused by an engine issue, electrical short circuit, or house fire |
Theft |
Car stolen and not recovered after 90 days |
Disclaimer: These are sample scenarios for illustration only. Actual claim approval and total loss classification will always depend on your insurer’s guidelines, policy coverage, and the formal damage assessment.
According to MMDA reports, flood-prone areas cause thousands of car insurance claims each year—many resulting in total loss. If your car ends up in one of those situations, here’s what to do next so you don’t get stuck.
Getting the news that your car is a total loss can be overwhelming—but knowing what to do next can help you stay in control of the situation. Here’s a step-by-step guide to make the car insurance claim process smoother:
Request the full damage report
Ask for the official findings from the claims adjuster, including photos and written documentation.
Review the FMV and repair cost computation
depreciation values and compare them with current market listings.
Only sign the Release Documents if you agree
This confirms your acceptance of the insurance payout. You’ll also need to surrender the OR/CR (Official Receipt & Certificate of Registration) and your license plates.
Ask about salvage buy-back (optional)
If you're interested in keeping the damaged vehicle—for spare parts or potential resale—check if a salvage retention option is available.
Make smarter decisions on coverage that fits your needs and your budget.
Now that you know what to expect after a total loss declaration, let’s cover how to avoid common delays and pitfalls that frustrate many claimants during the payout process.
Total loss claims can feel stressful—but delays often happen when key steps are missed. Here’s how to help speed things up and get your car insurance payout faster:
Submit complete requirements
This usually includes your OR/CR, damage photos, repair estimates, and the police report (if applicable).
Cooperate with your insurer’s appraiser
Be available for vehicle inspections or re-evaluations when needed.
Stay reachable during inspections or evaluations
Respond quickly to calls or emails from your insurer to avoid back-and-forth delays.
And most importantly: Get insured with a trusted provider like Oona.
With a strong reputation and responsive claims service, Oona makes it easier to recover from the unexpected.
Need protection from real-life road disasters? Explore Oona’s Car Insurance Plans
Whether it’s your first time filing a total loss claim or not, understanding the process can help you save time, money, and a lot of unnecessary stress.
When your car suffers serious damage, the real question isn’t “Can it still run?”—it’s “Is it still worth fixing?” In car insurance, it all comes down to value, not just function. That’s why knowing how total loss decisions are made is essential for every car owner in the Philippines.
By understanding the key thresholds, how Fair Market Value (FMV) is calculated, and what the claims process involves, you’ll be better equipped to handle worst-case scenarios with confidence—not confusion.
And if your vehicle is ever declared a total loss, at least now you know your rights, your options, and how to ensure you get the car insurance payout you truly deserve.
The best defense? A solid insurance plan that won’t leave you guessing when disaster strikes. Explore Oona Auto Insurance Plans
