Insurance payout and 'totaling'

In article ,
Michael Horowitz wrote:
You insure your a/c . You have an accident and the insurance company
says that if the estimate is between 60-70% of the insured value, they
declare it totaled.
Why is the cut-off point 30-40% lower than the insured value?

Because when they total the aircraft they get it and sell it for salvage.
Their total cost is $policy_value-$salvage. As soon as $repair exceeds
that, it's cheaper to total. Consider how much of an aircraft's value is
in the engine, avionics, etc and how much spare parts go for and you can
see that in a lot of accidents there will be a significant salvage value.

--
Ben Jackson

http://www.ben.com/