When is a Car Considered Totaled?

Elizabeth Rivelli
Elizabeth Rivelli
  • 5+ years writing insurance and personal finance topics

  • Auto, home, health, and life insurance expertise

Elizabeth has extensive insurance industry experience, having written for Insureon, Rate Retriever, and Insurify. She’s also finance and insurance editor for Car and Driver.

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Katie Powers
Edited 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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Updated December 22, 2022 at 11:00 AM PST

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A totaled car is one of the biggest headaches for a vehicle owner. A car is considered totaled when the cost of repairs exceeds its fair market value. If you get into an accident that badly damages your vehicle, or your car gets swept away in a flood, your insurance company may deem the car totaled.

To avoid totaling your vehicle, it’s important to drive safely. However, you can’t always control when your vehicle gets totaled, especially for a car with a low market value. In this guide, we’ll explain when a car is considered totaled, what to do if you total your car, and what your car insurance policy will cover.

When is a car considered totaled?

In general, a vehicle qualifies as a total loss when the cost of repairs matches or exceeds the actual cash value, or market value, of the car. 

Insurers also must abide by state thresholds when deciding if a car is totaled. For example, some states determine that a car is a total loss when the cost of repairs exceeds 75% or more of its market value.[1]

Despite common misconceptions about totaled cars, sometimes they can be repaired, but doing so may not be worth the cost. If your car is damaged in a covered event, and the cost of repairs is lower than the actual cash value of the vehicle, your insurer will pay for repairs. Insurance companies only declare a car totaled when it’s not worth the payout.

Here’s an example: Imagine your vehicle is worth $8,000 and an accident results in $10,000 in damage. If the insurer were to pay you $10,000 to fix the vehicle, it would lose $2,000. The insurer would pay you $8,000 to replace your totaled vehicle.

Important Information

Insurance companies decide when a car is a total loss — not the authorities or the owner. The decision process can be long and involved, and it includes getting a cost estimate to repair the damage.

What to do when you total your car

If you suspect that your vehicle may be totaled, you must take a few different actions. First, prioritize getting proper medical care if you or any passengers in your vehicle were injured. Next, you should contact the police and document the details of the crash via a written statement and photos of the damage.

Once you’ve received medical treatment and notified the proper authorities, follow these steps:

File a claim

When your car is in an accident, you’ll need to file a claim with your car insurance company. To start the claim process, you can call an agent or report the claim online, if your insurer offers that feature. Here’s a brief overview of what the claim process typically entails:

1. Complete the claim paperwork. After you report the claim to your insurance company, you’ll need to fill out paperwork. You may need to provide a police report, a statement of what happened, and any photos or videos you took of the damage. If anyone witnessed the accident, you might also be asked to provide their names and contact information.

2. Meet with an adjuster. When dealing with a totaled vehicle, the insurance company will probably have an adjuster inspect the vehicle in person. An adjuster works for the insurance company to investigate the claim and estimate your claim payout. Your insurance company might arrange to tow the car to a storage facility where the adjuster will assess the damage.

3. Receive your payout. If the adjuster determines that your car is a total loss, you’ll be notified and offered a cash settlement, minus any deductibles. But if you have a car lease or loan, the insurance company will first pay the leasing company or lender what you still owe.[1] If any money is left over from the settlement, you’ll receive the payment. And if the settlement amount is less than you owe on the vehicle, you’ll be responsible for making up the difference to the lender or leasing company.

Learn More: Why Do Car Insurance Companies Deny Claims?

Decide what you want to happen with your car

After the claim is settled, you may be able to choose what happens to your car. In most cases, your insurance company will sell the vehicle at an auction or to a salvage buyer, who may use the car for parts.

You may also be able to buy back your totaled vehicle if you’d rather use the settlement money to make the repairs. To inquire about buying back your totaled car, speak with your insurance agent or claim representative. They can explain how the process works and what fees you might be required to pay.

See More: Car Insurance Quotes for New Cars

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How much will your auto insurer cover when you total your car?

If your vehicle gets totaled in a covered loss, your insurance company will only provide a payout if you have the right type of coverage. Necessary coverage usually includes comprehensive insurance, collision insurance, and uninsured motorist insurance. With a liability-only policy, your vehicle won’t be covered if it gets totaled.

Comprehensive coverage

Comprehensive insurance is an optional policy that pays for your vehicle’s repairs after noncollision incidents that are out of your control. Comprehensive insurance covers damage from events like theft, vandalism, natural disasters, falling objects, things hitting your windshield, and accidents with animals. This policy covers your vehicle based on its actual cash value, minus a deductible.

Collision coverage

Collision insurance pays for your vehicle’s repairs after an accident that you were responsible for. It also covers single-vehicle accidents and rollovers. Like comprehensive insurance, collision insurance usually covers your vehicle up to its actual cash value and requires you to pay a deductible if you have a claim.

Collision insurance only applies to at-fault accidents. If your vehicle was totaled and you weren’t responsible for the crash, the at-fault driver’s insurance company covers these costs using their property damage liability insurance.

See Also: What to Do After a Car Accident: 7 Steps to Take

Uninsured motorist coverage

Uninsured/underinsured motorist coverage kicks in if an uninsured motorist hits your vehicle. It also applies to underinsured drivers with coverage limits below the market value of your vehicle. In this situation, your underinsured motorist insurance policy would cover your vehicle up to a certain dollar amount, rather than the car’s market value.

Having uninsured motorist coverage can be beneficial if you don’t have collision insurance, but it may not cover the full actual cash value of your vehicle. You should purchase both uninsured/underinsured motorist and collision coverage for the most protection.

See More: Car Insurance Quotes for Used Vehicles

What to do if you total a financed vehicle

If you total your financed vehicle, your lender will receive the claim settlement from your insurance company to pay off the loan. You’ll get to keep any money left over. The same situation applies for leased vehicles. But again, if you owe more than the settlement amount, you’ll have to make up the difference to the lender or leasing company. In that situation, you may wish you had gap insurance.

Should you purchase gap insurance?

Gap insurance can be a good investment if you finance your car. If your car is totaled, gap insurance pays the difference between the car’s diminished value and the remaining loan balance. 

Because your gap insurance pays off the remainder of the loan, you get to keep the insurance claim settlement and use the full amount to replace your vehicle. This way, you won’t still owe money on a car you can no longer use.

Calculating the value of your totaled car

Insurance companies use several factors when calculating the value of totaled cars. The most significant factors include the car’s actual cash value, the estimated cost of repairs, and the salvage value.

Actual cash value

Based on the replacement cost of the vehicle minus depreciation, actual cash value is the market value of your vehicle.[2] Depreciation accounts for things like vehicle wear and tear and mileage. Most insurance policies will pay up to your totaled car’s actual cash value.

Cost of repairs

Before declaring your car a total loss, the insurance adjuster will calculate the cost of repairs. The adjuster will figure out what needs to be repaired, then determine how much the parts and labor will cost. If the total cost of repairs is greater than the car’s actual cash value, it’s considered totaled.

Salvage value

A vehicle’s salvage value is what it would be worth if an insurance company sold it to a salvage yard for parts and scrap metal. No specific formula to determine a car’s market value exists, so insurers typically base the value on what similar cars have sold for at auction.

Learn More: Is Actual Cash Value What You Need?

Vehicle options after a car is totaled

If your car is totaled in an accident or other covered loss, you have a few options for what to do with your vehicle.

Replacement vehicle

If you rely on a car to commute to work or school, you can take the cash settlement from your insurance company and purchase a new vehicle. You could even use the money as a down payment on your next vehicle and finance the rest with an auto loan.

Auto insurer payout

If you own your vehicle outright, you get to keep the full cash settlement from your insurance company. You can keep that money or use it for any purpose, even if you don’t intend on purchasing another vehicle.

Keep and repair

It’s possible to keep your totaled vehicle if you want to complete the repairs yourself after working it out with your auto insurer. You can even use the cash settlement to pay for parts and labor. But you’ll need to apply for a rebuilt title before legally registering and driving the vehicle after it’s fixed.

See More: Rebuilt Title: What Is It and How Is It Different from a Salvage Title?

Totaled car FAQs

Here are answers to some commonly asked questions about totaled cars.

  • Do deployed airbags automatically make a vehicle totaled?

    No, a car is not automatically totaled if the airbags deploy in an accident. A vehicle is only totaled when the cost of repairs exceeds the car’s market value. If the cost of replacing the airbags exceeds the vehicle’s actual cash value, it would be considered totaled. However, airbag deployment is not one of the criteria for a totaled vehicle.

  • How do companies determine if a car is totaled?

    In general, insurance companies declare a vehicle a total loss when the cost of repairing the car is greater than the vehicle’s actual cash value, also known as the market value. Some states require insurers to declare a total loss when the cost of repairs meets a certain percentage of a car’s value. Most cars are also considered totaled when they can’t be repaired.

  • Can you buy back your totaled vehicle?

    Yes, you can buy back your totaled vehicle after the claim has been settled by your insurance company. You might decide to take back your totaled vehicle if the car is rare, it has sentimental value, or you don’t mind making the repairs. Specifics need to be worked out with your auto insurer, and buyback isn’t always an option.

    If you do make repairs, you’ll need to spend some money out of pocket. If the cost of repairs was lower than your car’s market value, it wouldn’t have been totaled. You’ll also have to apply for a rebuilt title and a new insurance policy before driving again.

  • How do you negotiate after a total loss?

    If you believe your totaled car claim settlement should be higher, you can try to negotiate with your insurer. To do this, you’ll need evidence to back up your counteroffer. You should research the fair market value of your vehicle and look to see what similar makes and models are going for in your area. You can also make a list of any upgrades you made to your vehicle, which could improve the market value. If you need help, you might also hire a lawyer who can negotiate on your behalf.

  • In an at-fault state, how are payments for a totaled vehicle determined?

    In an at-fault state, the driver who caused the accident is responsible for paying damages to the other party, either through their car insurance or out of their own pocket. The at-fault driver’s property damage liability insurance would pay for the other driver’s losses.

    But it can take a while to determine who’s at fault in an accident. In that case, if you have collision coverage, your insurance company may pay for your damaged car — and then recoup the money from the at-fault driver’s insurance when fault is settled.

    In no-fault states, the auto insurers of each driver cover the respective losses of the driver. In that case, if you don’t have collision coverage on your vehicle, you may not get reimbursed at all for your totaled car. 

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  1. Kelly Blue Book. "Totaled Car: Everything You Need to Know." Accessed December 21, 2022
  2. Kelly Blue Book. "Actual Cash Value: How it Works for Car Insurance." Accessed December 21, 2022
Elizabeth Rivelli
Elizabeth Rivelli

Elizabeth Rivelli is a freelance writer covering insurance and personal finance. She has extensive knowledge of various insurance lines, including property and casualty, health, and life insurance. Her byline has been featured in dozens of publications, including Investopedia, Forbes, Bankrate, NextAdvisor, and Insurance.com

Katie Powers
Edited byKatie PowersAuto and Life Insurance Editor
Photo of an Insurify author
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.

Featured in

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