What does "total loss" mean in the context of an insurance claim?

In the context of an insurance claim, "total loss" refers to a situation where the cost to repair an item exceeds its actual cash value. This means that the insurer determines that repairing the item would not be financially viable compared to its worth in its current condition. Thus, instead of spending a significant amount on repairs, the insurer considers it more practical to declare the item a total loss and compensate the policyholder based on its actual cash value before the incident occurred. This determination often leads to the insurer providing a payout that reflects the depreciated value of the item, rather than investing in repairs that would not restore the item to its pre-loss condition effectively. This concept allows for a clear resolution during the claims process and ensures that both the insurer and the insured have a common understanding of the item's status.