Total Loss Auto Claims Falling: Mitchell International

Terri Goveia | February 1, 2010

Despite slow car sales and a larger fleet of aging cars on the roads during the recession, total loss auto claims in the U.S. are actually on the decline, reports Mitchell International.

Total losses have been trending down since 2007, mostly due to drivers’ insurance choices, according to Greg Horn, Mitchell International’s vice president of industry relations. Those choices? More drivers with older vehicles are dropping collision and comprehensive insurance on those cars, creating a smaller pool of cars with first-party coverage.

“If they [the drivers who drop coverage] have an at-fault total loss accident, there is no coverage for this vehicle,” he points out in Mitchell’s latest Industry Trends Report. “Looking at the population of vehicles that carry comprehensive and collision coverage helps us understand that the oldest cars, and therefore those most likely to total, are eliminated from the pool of vehicles eligible for a claim.”

Older cars, no insurance?

The population of uninsured drivers often rises during an economic downturn. The Insurance Research Council estimates that 16% of U.S. drivers were on the roads without insurance during the recession.

Even the popular “cash for clunkers” (C4C) program in the U.S. didn’t swell the new vehicle pool by much, Horn notes. “C4C added 690,000 new vehicles to insurers’ books and replaced vehicles that likely did not have comprehensive and collision coverage. The “clunker” vehicles were required to have liability coverage at state minimum levels to qualify for the program but did not need first-party coverage.”