What Is A Total Loss

Updated March 15, 2022

Tow truck towing a totaled car (1)

Sometimes, no matter how carefully you drive and care for your car, you’ll find yourself with significant damage to your vehicle. A tree might fall on your car, an oncoming vehicle may swerve into your lane causing an accident or a flood could destroy it altogether.

In some instances, your insurance company might cover the costs to repair your car, but in other situations, your insurer might declare it a total loss. This can be an unsettling time, and you may not be sure what steps you should take. The more you understand about totaled cars and your options, the better prepared you’ll be. 

What Having a Totaled Car Mean?

A totaled car is considered a total loss. This terminology is used when your vehicle is so damaged that it can’t be repaired. It may also be totaled when the cost to repair it outweighs your car’s value just before the damage occurred. 

When Does an Insurance Company Consider a Vehicle a Total Loss? 

When determining if your car is totaled, your insurance company will compare the cost of repairing it to its actual cash value. Your vehicle’s cash value is based on factors like its pre-damage condition, make, model, year, mileage, and features. 

State and Insurance Company Threshold

There is no one way to determine when a car is totaled – it’s based on your state’s threshold and your insurance company’s guidelines.  

Every state has a threshold for when vehicles are considered to be totaled, but your insurance company might use a lower figure. 

That total loss threshold refers to when the cost to repair a vehicle reaches a certain percentage of its actual cash value. For example, a state with a 70% threshold means if the vehicle’s repair costs are equal to or greater than 70% of its value, then the vehicle must be declared a total loss.

Potential Unknown Damage Considerations

Some insurance companies will declare a car totaled even when the cost to repair the vehicle is significantly less than the vehicle’s actual cash value. 

Insurance companies take this approach because of the potential for there to be more damage than what’s initially apparent. If an adjuster evaluates a vehicle, they can really only see its exterior and underside. As a shop starts to repair it, they may find additional damage that can quickly increase the cost of repairs beyond what was expected. 

Some insurance companies account for these potential additional costs and declare the vehicle a loss without attempting to have it repaired. 

What Happens Once a Car Is Totaled? 

Your insurance company will have your car appraised, send an adjuster to evaluate the damage and the cost to repair your vehicle, and determine if it’s a total loss. They will then compare that cost to your vehicle’s actual cash value and reimburse you for the difference.

What Happens if You Have an Active Loan or Lease?

If you still owe money on a car loan, that balance will be deducted from the amount you’re reimbursed. And if you’re leasing your car, the insurance company will pay off the remaining balance on your lease before giving you what’s left.

What Happens if You Owe More Than Your Car’s Value?

If you owe more money on a car loan than your vehicle’s actual cash value (which can happen because of depreciation and high mileage), then you will still owe that difference to your lender. A GAP insurance policy can help to protect you in this situation; otherwise, you might find yourself still having to make car payments on a vehicle that you no longer have. 

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Can You Keep Your Vehicle if it’s a Total Loss?

In most cases, it makes sense to take the payout from your insurance company and use that money to buy a new vehicle. But in some situations, you might want to keep your totaled car. The vehicle could have sentimental value, or if you’re talented at making vehicle repairs, you may want to fix it yourself.

Many insurers will let you buy back your totaled car, but state laws vary. If you’re considering keeping your vehicle, contact your insurance company to learn about the process. Once your car is fixed, it will need to pass inspection and be assigned a rebuilt or salvage title. 

Your options for insuring the vehicle may also be limited. You could possibly only be eligible for liability insurance on your car because some companies might refuse to provide comprehensive or collision coverage for a car with a salvage or rebuilt title. 

What Type of Insurance Covers a Totaled Car?

To ensure you’re covered in case your car is ever totaled, you’ll want to make sure you have the right coverage to help cover a total loss. These insurance options provide the most coverage which can save you big time. 

  • Collision coverage helps to pay for expenses if you’re in a car accident with another vehicle or an object like a fence or light post. 
  • Comprehensive coverage pays for damage that isn’t caused by an accident. This damage could occur because of animals, vehicle theft, vandalism or weather. 
  • Uninsured/underinsured motorist coverage helps to protect you if you’re in an accident where another driver is at fault, but that driver doesn’t have insurance or doesn’t have enough coverage to pay for your damages. 
  • Gap coverage pays for the difference between how much you owe on your vehicle and how much your insurance company will pay you.  This is helpful because you won’t be left making monthly payments on a vehicle you can’t drive. 

Ensuring you’re protected in case your car is totaled can help make the experience less stressful. It can also make it easier for you to afford to buy another car.

If you’re worried about how you can afford additional coverage, your vehicle, don’t be. Getting extra coverage doesn’t have to be expensive, and Compare.com makes it easy to shop around and compare rates

What Do I Do Once I Believe My Vehicle is Totaled?

multiple vehicles involved in an accident that are now a total loss

If you think that your car is totaled, you’ll need to complete specific steps with your insurance provider. While each insurance company is different, here’s a general overview of what you can expect. 

File an Insurance Claim

When your car is damaged, the first thing you need to do is to file a claim with your insurance company. Depending on your insurer, you may be able to file a claim by phone, online or by mail. 

Have Your Vehicle Towed to a Body Shop

Your insurance company can’t require you take your vehicle to a body shop that they choose, but they may be able to provide you with a list of body shops that they have already approved and that they work with regularly. You can ultimately decide which shop you work with, so you may want to check references and ask others for recommendations of local shops that do good work. Depending on your insurance policy, your insurer might cover and reimburse you for the cost of towing your car. 

The body shop will give you an assessment of your car’s damage and the cost of the repairs. Your insurance company may also send a claims adjuster out to evaluate the vehicle, so it’s important to let them know where your vehicle is located and when it’s towed to the shop. 

Research the Value of Your Vehicle

While you’re waiting to find out what your insurance company will pay you for your car, do a little background research of your own. You can use websites like Kelley Blue Book to determine your vehicle’s worth before it was totaled. Knowing these figures can help you to determine if your insurance company is offering you a fair reimbursement for your car’s value.

Provide Requested Documents to Your Insurer

As your car insurance company processes the claim, they will probably request certain documents, like your title. If you have a loan out on your car, then your lender will need to provide the insurance company with the title. However, if you’re leasing the vehicle, then the lessor will have the title and will do that for you. 

Review Your Offer

Once your insurer has processed the claim, they will give you an offer for your totaled vehicle. You’ll need to compare this offer against the value you came up with during your research.

It’s also important to consider your remaining balance on any auto loans. You’ll need to deduct that balance from the insurance offer to determine just how much money you would be receiving after the car loan is paid off. 

If you feel that your auto insurance company is significantly undervaluing your vehicle, you can dispute it, but it’s important to be prepared with the fair market value for comparable cars to prove your argument. You might also hire a private assessor to confirm the fair market value of your car. If you’re unable to negotiate with your insurer, you can seek legal advice about your options. 

Start Shopping for a New Car

Once you know how much money you’ll be receiving for your car, you can start shopping for a new vehicle. Depending on your previous car’s value, you might be able to use the payout to buy a used car outright, or to put a down payment on a new car. 

Totaled Car FAQs

Can you fix a totaled car? 

Whether or not you can fix a totaled car will depend on the amount of damage it has. If you do want to repair your car but your insurance company has declared it a total loss, then you will need to explore buying your car back and making those repairs yourself. Keep in mind that your options for insuring that car in the future may be limited. 

How much would my car be worth if totaled? 

Your vehicle’s value depends on many factors, including its age, make and model, mileage, and condition. Your insurance company will provide you with an assessment of the actual cash value of the car, but you can do your own research, too, using sites like Kelley Blue Book and looking to see what comparable vehicles are selling for in your area.

What if my car is totaled in an accident but I’m not at fault? 

If you’re not at fault in the accident that causes your car to be totaled, the other driver’s insurance company will usually pay your car’s actual cash value.


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