What happens when your car is totaled: Options for a totaled car 

What happens when your car is totaled? 

When your car is totaled after an accident, it means the insurance company has determined that repair costs are too high to make the vehicle worth repairing.  

Following an accident, an insurance adjuster inspects the car to determine whether it is worth fixing. In many cases, the insurance company takes the adjuster's findings and makes its own judgment about whether to repair the vehicle. However, in some states, the vehicle is determined to be a total loss if the cost to repair it exceeds a specific percentage of the car's value.  

If you were at fault for an accident or something else happened that caused your car to be totaled -- such as a tree falling on the car and crushing it -- your insurance company will pay you the value of the vehicle minus the deductible as long as you have collision coverage (or comprehensive coverage if the damage wasn't caused by a crash.)

When your car is totaled, you have a few options:

1. Take the payout. If you’re good with the check and ready to move on, cash it and go car shopping. Your insurance company will keep the car and likely sell it to a salvage yard. 
2. Appeal the settlement. If you think the payout is too low, you can appeal the insurance company’s settlement and try to get more money for the car. 
3. Keep your salvaged car. Some states will allow you to keep the car. The salvage value of the car (what the insurance company would get from selling it to a salvage yard) will be deducted from your settlement check. If you choose to keep it, you can:
   1. Sell it to a junkyard. Most junkyards will buy salvaged cars for scrap metal. The upside is they will also usually transport it for you. 
   2. Trade it in. Some dealerships will accept trade-ins with a salvage title, though you're not going to get the best amount for it. 
   3. Repair it yourself. If you want to keep your car, you can repair it yourself. If the damage is mainly cosmetic, like hail damage, it may not even need repairs. However, insurance costs for a salvage title are usually higher. 
   4. Donate it to charity. If all else fails, you could donate the vehicle to charity and claim a tax credit. Charities accept donations of cars even if they aren’t drivable.

What happens when your car is totaled but still drivable? 

If your totaled car is still drivable, you might be able to keep it, depending on what the law says in your state.  

If you have this option and exercise it, you will likely receive a check from your insurer for the car’s value minus its salvage value. This is the amount of money the insurance company would receive if it sold the vehicle to a salvage yard.  

However, vehicles in this situation typically have a salvage or branded title. That means that getting insurance for the vehicle or trying to sell it could be challenging.  

What happens when your car is totaled and you still owe money? 

If your insurance policy covers the damage to your vehicle, the check you receive will likely be in an amount that reflects your vehicle's current fair value. This may or may not be enough to help you pay off the car loan completely.  

If your auto insurance does not cover the type of event that caused your vehicle to be totaled — or if your car's value is lower than the amount left on your car loan — you will be responsible for paying off the balance of your loan, even if the vehicle was declared a total loss.  

When is a car considered totaled? 

When exactly do insurance companies total a car? 

Simply put, the definition of totaled is that the repairs are expected to cost more than the car's value, it will be totaled. 

Your  insurance adjuster will note your mileage, the condition of the body, interior and tires, and any additional parts or equipment you've added. Then, based on the pre-crash condition of your car, your adjuster will find similar models for sale in your area and establish the total loss estimate on these comparable cars. This is called the actual cash value (ACV) of your car. 

Your insurance company may decide your damaged car is a total loss if: 

• It can't be repaired safely 

• Repairs would cost more than the car is worth 

• State laws determine the exact definition of a totaled car based on a percentage of the car’s value or a specific calculation. This total loss threshold varies from 50% to 100% of the car's pre-accident value, depending on the state. Many states use a Total Loss Formula (TLF): the cost of repairs plus the car's scrap value must equal or exceed the car's pre-accident value. 

Below, you'll see Total Loss Formulas and total loss threshold by state. 

*Fair market value

**National Automobile Dealers Association

How long does it take to get the insurance check for a totaled car? 

Most companies will issue payment within a few days of finalizing the actual cash value amount. However, how long it will actually take depends on the insurance company. Some insurers may take just a few days, while others may take up to 30 days. Some states have requirements limiting insurance companies' time to process claims, ensuring you get your payout faster.  

How to get the most money from insurance for a totaled car 

To get the biggest check possible for your totaled car, you want to make sure your insurer understands its real value. Consider getting written quotes from local car dealers who can state how much money the make, model and year of your vehicle would likely command in the used-car market.  

Also, remember to remind your insurer about any special features or custom parts that would boost your car's value.  

Present all this information to your insurer either before the adjuster arrives or after you receive a settlement amount that you feel is low.  

When a car is totaled, what happens to the title?

The title is usually transferred to the insurance company. The company will then sell the totaled vehicle for its salvage value. If the car is no longer drivable, it will likely be parted out, but if it can be driven the title may be branded as "salvage."

The same thing will happen to the title if you decide to keep your car after it has been totaled. A car with a salvage title can be more difficult to insure.

What if insurance wants to total my car but I want to keep it? 

In most states, you can keep your car after it has been totaled. In that case, the insurance company will subtract the salvage value of the car from the settlement, and you can keep it. It's important to be aware that keeping a totaled car can present challenges.

First, if you want to drive it, you will need to repair and insure it. In some cases, such as hail damage, repairs may not be necessary. However, you will still need to make sure it's roadworthy so you can register and insure it. A totaled car will often have a salvage title, which can make it harder to get insurance.

You can also choose to sell your car for salvage yourself or part it out, but this may be more effort than it's worth.

Sources :

• Texas Department of Insurance. "Hold on! My totaled car is worth more than insurance wants to pay." Accessed June 2024. 
• Kelley Blue Book. “Totaled Car: Everything You Need to Know.” Accessed June 2024. 

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