What type of loss occurs when repairing a vehicle is more expensive than the vehicle's value post-repair?

When the cost of repairing a vehicle exceeds its value after the repairs are completed, a constructive total loss occurs. This situation is specifically relevant in the context of insurance claims, where the insurance carrier may determine that the vehicle is effectively a total loss, despite it being repairable.

In a constructive total loss scenario, the economic decision is made based on the principle that the repair costs outweigh the car's post-repair value, leading to a conclusion that it is more practical to declare the vehicle a total loss, often resulting in a payout that reflects the car's pre-loss market value rather than covering repair costs.

This concept is significant in the insurance industry, as it helps determine when an insurer will make a claim payout and assists in defining the financial responsibilities of both the driver and the insurance company regarding vehicle damages. Other options listed, such as liability losses, negligence, and punitive damages, pertain to different aspects of liability and insurance practices and do not relate directly to the measurement of a vehicle's repair cost versus its value.