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Can an insurance company force you to total your car? (2023)

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If your car sustains severe damage in an accident, your auto insurance company may declare it totaled. This means it would cost more to repair your vehicle than it’s actually worth. You may be surprised to learn that you don’t always have to accept your car insurance provider’s decision to total your car. Depending on your situation, you may have options.

To find the best car insurance policy for your unique budget and needs, try comparing car insurance quotes online. You’ll receive personalized car insurance quotes to help you find something to fit your lifestyle.

Quick Facts

  • If the cost to repair your vehicle exceeds its market value, your auto insurance company may declare it a total loss.

  • While you can dispute their decision, you’ll need a great deal of data, documentation, and evidence to prove your case.

  • Even though you may be able to keep your vehicle after it’s been deemed a total loss, you won’t be able to drive it until it’s been completely repaired and declared rebuilt.

What is a totaled car?

Can my insurance company force me to total my car?

Yes, your insurance provider can declare your vehicle a total loss after an accident. However, you may have the option to keep the car if you choose to do so.

A totaled vehicle is a vehicle that is considered a total loss because its repair costs exceed its fair market value. A car insurance company might also declare a car totaled if it would be unsafe to drive even after the appropriate repairs are made.

While each state sets its own total loss threshold, car insurance companies have the right to choose a lower one. Often, an auto insurance provider will total a car even if the repair costs are less than its actual cash value (ACV). They do this because it can be complicated to understand the entire extent of the vehicle’s damage before the repair process begins.

Once your insurance company declares your damaged vehicle totaled, you’ll receive a payout of the car’s actual cash value minus your deductible. You can expect the ACV to be much less than what you paid for the vehicle, even if it’s newer. If you have new car replacement coverage on your policy, you’ll receive enough compensation to replace your car with a similar one.

See More: Best Car Insurance Companies

How to Protect Against the Possibility of a Totaled Car

In a perfect world, you’d never have to deal with a totaled car. Unfortunately, accidents happen, so it’s a good idea to be proactive and take these steps.

Save for a New Car

A totaled car means you’ll need money for a new car. Ideally, you’d plan ahead and have an emergency fund saved up. If your vehicle is older, this is a particularly good idea, as there’s a greater chance its repair costs will exceed its value after an accident.

Don’t worry if you don’t have the money for a new car saved beforehand. Once your vehicle is deemed a total loss, you can pick up a part-time job or reduce your expenses to save for a new car. While you do so, explore alternative transportation options.

Invest in Gap Insurance

If you’re financing your car, its actual cash value might be less than the balance you owe on it. In this case, you’re still responsible for covering the balance. To avoid this issue, you may want to purchase gap insurance. Gap insurance will pay the difference between the amount you owe and the actual cash value so you won’t be left paying potentially thousands of dollars.

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What to Do If My Car Insurance Company Totals My Car

Once your car is actually totaled, you may want to explore these options.

Dispute the Decision

Just because your auto insurance provider decides to total your car doesn’t mean you have to accept their decision. To dispute it, you can prove that the repair costs will be less than the estimate from the claims adjuster. You might want to work with another claims adjuster or explore what the repairs would cost at various auto repair or body shops.

Another way to challenge the decision is to dispute your vehicle’s actual cash value or scrap value. While this is easier said than done, you may find some evidence that proves your vehicle is worth more than estimated. Maybe it’s in great condition, or its mileage is very low for how old it is.

Check Out: How Much Will Your Insurance Pay for a Totaled Car?

Keep Your Car

If you’d like (and state laws allow it), you can decide to keep your car so you can repair it yourself or sell it to a salvage yard. In this situation, the auto insurance provider will compensate you for the actual cash value less your deductible and your vehicle’s scrap value.

Keep in mind that if you do keep your car, it will have a salvage title or salvage certificate, which might make it difficult for you to sell it for a fair price in the future. If you do decide to take the DIY route to repair your vehicle, it’s smart to get estimates from a few mechanics. This way, you can make sure to repair it at a reasonable price while still maintaining its safety and integrity.

See More: Cheap Car Insurance

How to Dispute an Insurance Company Decision

If you do dispute your car insurance company’s decision, here are some more tips to increase your chances of success.

Negotiate with Your Car Insurance Company

First and foremost, ask your auto insurance provider how they determined the value of the vehicle. Then, use supporting documentation to show any inaccuracies you’ve found. These might include recent photos of your car as well as maintenance and inspection records that prove it was in better condition or had fewer miles on it.

Data from reputable sources like Kelley Blue Book and Edmunds that reveals what similar vehicles in your area sell for might help as well.

Get an Independent Appraisal

Chances are your car insurance policy has an appraisal clause. This clause states that you and your insurance company can each get your own appraisals. You and the company also split the cost of a third appraisal that serves as an “umpire” and ultimately decides which is most accurate.

You can take advantage of this clause and visit a repair shop to get your car independently appraised. Through this strategy, you may be able to show that the value of your car is higher than your insurance company says and eventually secure a better total loss settlement offer.

Consider Mediation

Some states, like Florida and California, offer low-cost or even free mediation for auto insurance disputes as long as they meet certain requirements. If you pursue mediation, you and a representative from your car insurance company will meet with a certified mediator. The mediator will then try to help you both come to a nonbinding resolution.

Hire a Car Accident Lawyer

If all else fails, you may want to hire a lawyer and sue the car insurance company. Before you go this route, however, make sure it makes financial sense. Think about how much you’re willing to pay and what you’d get out of your investment. You might find that you’ll actually lose money if you seek legal representation after you’re forced to total your car.

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Make the Best Decision for Your Situation

While a totaled car is unpleasant, knowing your options can help you make the best choice for your unique circumstances. If you agree with your car insurance company’s decision to total your vehicle, you can accept their payout and put the funds toward a new car.

You may even be able to keep your car and repair it yourself or sell it. If you don’t agree with your car insurance company, you may dispute their decision.

Frequently Asked Questions

  • If you decide to keep your totaled car, you won’t be able to drive it legally. Once a vehicle has a salvage title, it must be repaired and inspected before it’s declared rebuilt and driveable. Keep in mind that many car insurance companies won’t insure cars with a rebuilt title.

  • Unfortunately, you’ll have to complete your lease payments, even if your car gets totaled. Depending on your lessor, you may be required to invest in gap insurance, which will pay off the rest of your lease if your car becomes a total loss.

  • The reality is that a totaled car doesn’t change the repayment terms you agreed to when you first took out your auto loan. Therefore, you must make your monthly car payments until you pay off your vehicle. Even though you’re no longer able to drive your vehicle, your lender can still require you to repay your car loan in full.

  • The circumstances of the loss will determine the type of car insurance that gets used for a totaled car. If you’re in an auto accident with another vehicle or object like a fence, collision coverage will kick in. Other types of insurance coverage that may come into play include comprehensive coverage, property damage liability coverage, and uninsured and underinsured motorist coverage.

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  • Data scientists at Insurify analyzed more than 40 million real-time auto insurance rates from our partner providers across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page. The car insurance data includes coverage analysis and details on drivers' vehicles, driving records, and demographic information. Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Service's database of auto insurance rates. With these insights, Insurify is able to offer drivers insight into how companies price their car insurance premiums.

Anna Baluch
Anna BaluchInsurance Writer

Anna Baluch is a Cleveland-based personal finance and insurance expert. With an MBA from Roosevelt University, she enjoys writing educational content that helps people make smart financial decisions. Her work can be seen across the internet on many publications, including Freedom Debt Relief, Credit Karma, RateGenius, and the Balance. Connect with Anna on LinkedIn.