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

In the event of a totaled car, insurance companies will generally pay the car’s market value prior to the collision or incident minus your deductible and any other fees you may owe.

Katie Powers
Written byKatie Powers
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Katie PowersAuto and Life Insurance Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

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Tanveen Vohra
Edited byTanveen Vohra
Tanveen Vohra
Tanveen VohraManager of Content and Communications
  • Property and casualty insurance specialist

  • 4+ years creating insurance content

Tanveen manages Insurify's data insights, annual home and auto insurance reports, and media communications. She’s regularly featured in media interviews on insurance topics.

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Updated May 28, 2024

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Filing insurance claims can be stressful — especially for a totaled car. Even figuring out whether your car qualifies as totaled can be unclear.

If your insurance company decides to total your car, it’ll generally pay you the fair market value of your car — also called actual cash value (ACV) — from just before the car accident.[1] This won’t necessarily cover what you paid for the car, the cost to get a new car, or the remaining balance on your auto loan.

Learn more about how much insurance will pay for your totaled car by reading our full guide or watching the short video below.

What is a totaled car?

A car is a total loss (totaled) when you file a claim for it and your insurer determines that repairs would cost more than the car’s value.[2]

Your car can incur enough damage to total in both collision and non-collision events. For example, the following incidents can total your vehicle:

  • Collision

  • Flash flooding

  • Hailstorm

The lower the car’s value, the easier it is for damage to result in totaling your vehicle.

For example, if your car needs $5,000 of repair work, an insurer will pay that if your car is worth $40,000. But if your car’s value is only $4,000, a $5,000 repair is more than the car’s value, and the insurer may total it.

Additionally, most states set a minimum threshold for insurers to consider costs repairable or totaled.[3] For example, in Oklahoma, repair costs totaling 60% or more of your car’s cash value would result in your insurer totaling the car.[4]

Total loss formula

In most states, insurers use the total loss formula, which requires a bit of calculation. These are the factors considered in the calculation:

  • Fair market value (FMV): Your car’s fair market value prior to the damage

  • Repairs value (RV): Cost of repairs to completely fix your car

  • Salvage value (SV): Your car’s value as a salvage vehicle sold to a scrapyard

Here’s the total loss formula:

  • If the repairs value is greater than or equal to the fair market value minus the salvage value, the insurer will declare the car a total loss.[1][5]

In other words, if it costs more to fix your car than to pay out what your car was worth (minus any proceeds it can get from selling your car to a scrapyard), your insurer will likely pay you the value. It’ll declare your car a total loss, sell it for parts, and pay you what it was worth rather than paying to fix it up.

Example

For a $25,000 car that costs $15,000 to repair and is now worth $5,000 at the junkyard, your insurer might choose not to total your car and just pay for the repairs. The repairs ($15,000) will be less than what it’ll have to pay you minus the salvage value ($25,000 − $5,000 = $20,000).

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How much will my insurance pay for my totaled car?

If the auto insurance company declares your car is a total loss, it’ll pay you the car’s fair market value — also known as its actual cash value (ACV) — minus any deductible. In other words, the payout amount for your totaled car is what you would’ve been able to earn if you’d sold it prior to the damage.[1]

For example, if your car’s fair market value was $25,000 just before it incurred damage, that’s how much the insurance company would pay you if it totals your car. If you have a deductible, other insurance fees, or a loan balance on the car, these expenses will come out of that fair market value determined before you get your payout.

How to calculate the fair market value of a car

To estimate a possible insurance payout from your totaled car, you can easily calculate your car’s fair market value with tools like Kelley Blue Book (KBB) or Edmunds. These sites aggregate data from real-world used-car sales to help users determine their car’s market value.

Fair market value also accounts for factors like car age, mileage, and condition — just like any savvy car shopper would when making a purchase decision. However, fair market value isn’t: 

  • How much you paid for the car

  • How much money you have left on your loan if you financed your car

  • How much it’ll cost you to buy a new, similar car

A lower fair market value can leave people who financed their vehicles in tough financial spots after an accident. If the fair market value you receive through the claims process doesn’t cover what you owe on the car, you’ll still need to pay the remaining loan balance on a car you no longer own — unless you have gap insurance.

What Happens If You Get Into a Car Accident Without Insurance?

What Happens If You Get Into a Car Accident Without Insurance?

Totaled car insurance: Are you covered?

Unfortunately, whether you can file a claim for a totaled car depends on the circumstances of how the damage happened and what type of insurance coverage you have.

Here are the four main types of insurance coverage that can potentially pay for a totaled car:

Coverage TypeWhose Insurance?When It Kicks in
Property damage liabilityOther driver’sIf someone hits your car
Uninsured/underinsured motorist property damageYoursIf someone hits your car, but they’re driving without insurance or not carrying enough coverage to pay for your totaled car; also applies in a hit-and-run accident
CollisionYoursIf you caused the damage while driving your car, such as hitting another vehicle or a tree; a deductible applies
ComprehensiveYoursIf you’re not driving your car and it incurs damage, such as from a flash flood or falling tree; a deductible applies

While it may feel unlikely, accidents happen, and it’s important to make sure you have sufficient coverage. Remember to ask about the above coverages when you’re shopping for new car insurance or adding on to a current policy. Unless your car is very old or inexpensive, you’ll likely want more than just liability insurance.

How Much Car Insurance Do You Need? (2024)

How Much Car Insurance Do You Need? (2024)

How does gap insurance work if your car is totaled?

Guaranteed asset protection (gap) insurance offers payment for the difference between your remaining car loan balance and what your car insurance policy pays if you total your car.

How does gap insurance work for a totaled car

For example, let’s say you still owe $25,000 on a car with an ACV of $15,000 and have a $1,000 deductible. Your insurance company will only offer $14,000 after you pay your deductible, leaving you with a remaining loan balance of $11,000 for a car you no longer own.

If you have gap insurance, your insurer will pay the outstanding $11,000 left on your loan minus your deductible.

Do you still have to pay insurance if your car is totaled?

If you total your car, deciding whether to maintain insurance coverage depends on how soon you plan to get a new vehicle and how long you’ve had your current policy. Many insurance companies offer insurance discounts to loyal customers — and you can lose that discount by canceling your policy, even if you plan to return not long after.

If you plan to get a replacement car relatively quickly, you should continue paying for insurance so you don’t lose your loyalty status or risk a gap in insurance coverage.

What happens if you total your car?

Knowing what to do after totaling your car may feel stressful, but the process is fairly straightforward. You need to file a claim with your insurance company after incurring damage in an accident to determine whether to total the car or if it qualifies for repairs.

Here’s how the claims process generally works:

  1. File a claim with the auto insurance company. After an accident, file a claim with your insurance company or the other driver’s insurance company, depending on who’s at fault and if you have collision or comprehensive coverage.

  2. The insurer estimates the repair costs. The insurance company will send an insurance adjuster to inspect your car and calculate an estimate for auto body repair costs.

  3. The insurer decides whether to total your car. The insurance company compares the cost of the repairs against your car’s pre-damage value. If repair costs meet a certain threshold, it’ll declare your car a total loss.

  4. The insurer offers a cash settlement. If the insurer declares your car totaled, it’ll offer you a cash payout. You can review this settlement and decide whether it’s fair — and if not, you have options to negotiate.[6]

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Fighting a total loss settlement

If the insurance company declares your car totaled and offers you a total loss settlement, it’s important to know that this isn’t a take-it-or-leave-it situation. If you don’t agree with the offer, you’re free to negotiate a counteroffer.

Your chances of success may increase if you follow a few strategies:

  • Review your policy. Your policy, which is essentially a contract, will spell out any rights you do or don’t have for contesting any claims.

  • Gather evidence. If you invested money in your car, like recently buying new tires or expensive sound equipment, get the receipts to back you up and estimate your car’s value using tools like Edmunds or KBB.

  • Get an independent appraisal. Another appraiser may be able to offer a higher estimate, particularly if you can show receipts for work you’ve done to your car.

  • Contact your state’s insurance commissioner. Every state has an office for consumer insurance, and it may be able to advise you on your state-specific rights.

  • Hire an attorney. If all else fails, an attorney may be able to help you get your car’s full value back.[7]

Following these steps can make the total loss settlement process lean more in your favor and could even lead to a bigger insurance payout in the event of a totaled car.

Totaled car FAQs

Here are quick answers to some of the most common questions about how much insurance will pay for your totaled car.

  • How long does it take to get an insurance check for your totaled car?

    How quickly the claims process takes depends on a few factors, like state laws and the accident’s severity. In general, it shouldn’t take much longer than a month to get an insurance check after an accident. It can sometimes take only a few days.

    While each state has different laws regarding how many days insurance companies can take to investigate claims, it’s usually around 30 days. If the case is clear-cut — say, a hailstorm with no injuries — the investigation is typically quicker. If there are serious injuries or questions about who was at fault, the investigation process may take more time.

  • Will your insurance company pay off a totaled car?

    If you’re still paying off your car, the insurance company generally sends the payout to your lender to pay off your loan, with any extra funds going to you. Sometimes, the cash settlement isn’t enough to cover your loan balance, and you’ll be in the unfortunate scenario of making car payments on a vehicle you no longer have.

    The only exception is if you purchased gap insurance, which can cover the difference between your loan balance and the insurance payout.

  • Will your insurance increase if you total your car?

    Yes. Your insurance costs will likely increase if you total your car. According to internal data, drivers with a past at-fault accident pay $237 per month, while drivers with clean records pay $160.

  • Can you keep a totaled car?

    Sometimes. Generally, your insurance company will take possession of your totaled car to sell it for scrap and recoup some of its cost. In some cases, you might prefer to keep it.

    In that case, you’ll need to check with your state’s rules. For example, most states have restrictions on whether you can legally keep your totaled car. If your state allows it, you’ll need to let your insurance company know as soon as possible.

  • What is a salvage title?

    Vehicles with a salvage title have had enough damage that the cost of vehicle repairs would exceed the value of the vehicle. Insurers will issue a salvage title after the insurance company declares it a total loss. You can’t legally drive a car with a salvage title on the road. You or your insurer can sell it for parts.

    If you opt to keep and repair your totaled car on your own, some states allow you to get your rebuilt car inspected. If it passes, it’ll receive a rebuilt salvage title that clears it for road travel again.

  • What if a collision totals your car but you’re not at fault?

    If you’re not at fault, you can file a claim with the other driver’s insurance in certain states. Alternatively, if the damage is no one’s fault and you purchased comprehensive insurance, you can file a claim with your insurance company.

    If someone else caused the damage, your insurance company may pursue the other insurer for reimbursement.

  • How much is your totaled car worth?

    If your car is a total loss, insurers will offer you a payout equal to your car’s fair market value prior to the accident damage. If you opt to keep your car, however, your insurer will subtract the salvage price from your totaled car’s value.

    Some states allow you to repair and retitle a totaled car, but rebuilt car insurance is typically more costly for these cars, so their overall value will remain low.

    Overall, it’s often worth seeing how much insurance will pay for your totaled car through the claims process over keeping or rebuilding it. The payout you receive (fair market value minus deductible and fees) can help you examine how much car insurance you can afford when shopping for a replacement — and you can always contest a settlement you find unfair.

Sources

  1. Kelley Blue Book. "Totaled Car: Everything You Need to Know."
  2. Insurance Information Institute. "Auto insurance jargon buster."
  3. NOLO. "The Insurance Company Says My Car Is a Total Loss. What Now?."
  4. Oklahoma Tax Commission. "Chapter 60. Motor Vehicles."
  5. FindLaw. "What Happens When Your Car Is Totaled?."
  6. Insurance Information Institute. "Determining your car's value and cost of repair."
  7. Insurance Information Institute. "What should I do if I am having trouble settling my claim?."
Katie Powers
Katie PowersAuto and Life Insurance Editor

Katie Powers is an insurance writer at Insurify with a producer’s license for property and casualty insurance in Massachusetts and expertise in personal finance and auto insurance topics. She strives to help consumers make better financial decisions. Prior to joining Insurify, she completed her undergraduate and graduate degrees at Emerson College. Her work has been published in St. Louis Magazine, the Boston Globe, and elsewhere. Connect with Katie on LinkedIn.

Tanveen Vohra
Edited byTanveen VohraManager of Content and Communications
Tanveen Vohra
Tanveen VohraManager of Content and Communications
  • Property and casualty insurance specialist

  • 4+ years creating insurance content

Tanveen manages Insurify's data insights, annual home and auto insurance reports, and media communications. She’s regularly featured in media interviews on insurance topics.

Featured in

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