Total loss refers to a situation where an asset, such as a vehicle or property, is damaged beyond repair or its value is completely diminished. In insurance terms, it means that the cost to repair the item exceeds its current market value. This often leads to the insurance company declaring the asset a total loss and compensating the owner accordingly. In the context of auto insurance, a total loss can occur after an accident where the car is severely damaged. The insurance provider will assess the damage and determine if it qualifies as a total loss, allowing the policyholder to receive a payout based on the vehicle's pre-accident value.