Can an Insurance Company Force You to Total Your Car?

If you disagree with your insurer’s decision to declare your car a total loss, you can dispute the decision. Here’s what to know.

Athena Valentine Lent
Athena Valentine Lent

Athena Valentine Lent is a finance columnist for Slate and the author of Budgeting for Dummies (Wiley, 2023). Her writing has appeared in BuzzzFeed, The College Investor, GOBankingRates, Money Under 30, and Keeper Tax among other places. Her personal finance blog, Money Smart Latina, won the Plutus Award for "Best Personal Finance Content for Underserved Communities" in 2020 and was nominated for "Blog of the Year" in 2022. When not working she can be found with her main man, a polydactyl cat named Harrison George. 

Danny Smith
Edited byDanny Smith
Photo of an Insurify author
Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

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Updated September 10, 2023

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If you find yourself in an accident that severely damages your car, it might be totaled. A totaled car is a vehicle that costs more to fix than it’s worth. In accidents like this, your car insurance company decides whether to repair the vehicle or cut you a check. However, if you disagree with a car insurance company forcing you to total your car, you may have options.

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What is a totaled car?

Can your insurance company force you to total your car?

Yes, your insurance company 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 car is a vehicle that’s been determined to be a total loss after an accident. Insurers will total your vehicle instead of repairing it when the cost of repairs exceeds its actual cash value. Car insurance companies can also declare your vehicle totaled if you can’t drive it after needed repairs.[1]

Every state has a unique total loss formula to measure whether a vehicle is worth its repairs, as do car insurance companies. Insurance companies can have a lower total loss threshold and often total a vehicle even when the estimate to fix the car is less than the current value.

If your car insurance company decides to total your vehicle, it’ll compensate you with a check for your car’s worth minus your deductible.

The 10 Best Car Insurance Companies (April 2024)

The 10 Best Car Insurance Companies (April 2024)

How to prepare for the possibility of a totaled car

You should always be prepared for the possibility of having your car totaled.

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 good idea, as there’s a greater chance its repair costs will exceed its value after an accident.

If you don’t have enough savings, you’ll need to consider alternative transportation options while you figure out how to get another car.

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 pays the difference between the amount you owe and your car’s actual cash value so that you won’t be left paying potentially thousands of dollars for a car you no longer have.

Consider new car replacement coverage

New car replacement coverage is when your insurance replaces your current vehicle if you total it. Car insurance companies will pay for a vehicle with the same make and model minus your deductible.

This type of coverage is usually an add-on to your current policy. It may require you to have other types of coverage, such as collision insurance. Collision insurance will cover some of the costs of a totaled car but won’t replace the entire vehicle.

What to do if your insurer totals your car

If you accept its decision, your car insurance company will ask you to transfer your car title to it. Your insurer will then subtract your deductible from the payout and send it to you or your lender. If the loan amount owed exceeds your car’s value, you won’t receive anything — it will go straight to your lender.

But you don’t have to accept their decision. One common reason is that you’d end up upside down on your auto loan.[2] If the check you receive for your car is less than what you currently owe, you still have to pay the difference, leaving you upside down on the loan. Another reason to keep your vehicle is if it’s less than five years old or holds sentimental value to you (such as inheriting a car from a family member).

Dispute the decision

Just because your auto insurer decides to total your car doesn’t mean you have to accept the 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 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 has very low mileage for how old it is.

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 company will compensate you for the actual cash value less your collision and comprehensive 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. It also means that you can’t drive the car until you fix it and get a rebuilt title.

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.

How Much Will Insurance Pay for My Totaled Car? (Full Guide)

How Much Will Insurance Pay for My Totaled Car? (Full Guide)

How to dispute an insurance company decision

Suppose you choose to dispute the decision your insurer made. In that case, you’ll want to gather the necessary information and follow these steps.

Negotiate with your car insurance company

First, ask your auto insurance company how it determined your vehicle’s value. 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.[3]

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 non-binding resolution.

Hire a 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

You have to choose the best scenario for you and your finances. It’s discouraging to have your car totaled, especially if you’re not financially stable. Do your research, run the numbers, and ask questions to ensure you make an informed decision.

Totaled car FAQs

Dealing with your insurance company after a car accident can be stressful. Below, you’ll find answers to some of the most commonly asked questions about totaled cars.

  • Can you legally drive a totaled car?

    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 drivable. Keep in mind that many car insurance companies won’t insure cars with rebuilt titles.

  • If it’s a leased car, what happens?

    Unfortunately, you’ll have to complete your lease payments even if your insurance company totals your car. Your leasing company may have required you to invest in gap insurance when you got the car, which will pay off the rest of your lease after a total loss.

  • If a car is totaled, do you still have to pay the loan?

    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.

  • What type of insurance covers a totaled car?

    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 and uninsured/underinsured motorist coverage. If another driver is at fault for totaling your vehicle, that driver’s property damage liability coverage would come into play.

Sources

  1. Kelley Blue Book. "Totaled Car: Everything You Need to Know."
  2. Capital One. "What Does it Mean to be Upside Down on a Car Loan?."
  3. Nolo. "The Insurance Company Totaled My Car. What Now?."
Athena Valentine Lent
Athena Valentine Lent

Athena Valentine Lent is a finance columnist for Slate and the author of Budgeting for Dummies (Wiley, 2023). Her writing has appeared in BuzzzFeed, The College Investor, GOBankingRates, Money Under 30, and Keeper Tax among other places. Her personal finance blog, Money Smart Latina, won the Plutus Award for "Best Personal Finance Content for Underserved Communities" in 2020 and was nominated for "Blog of the Year" in 2022. When not working she can be found with her main man, a polydactyl cat named Harrison George. 

Danny Smith
Edited byDanny Smith
Photo of an Insurify author
Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

Featured in

media logo

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