Quick Answer
Car accidents are stressful, but having an accident that results in totaled car can be especially devastating.
What happens next?
We’re going to walk you through the steps to take after your car is totaled.
We’ll cover everything, from understanding your insurance coverage to negotiating a fair settlement.
We'll discuss documenting the damage and filing a claim to dealing with salvage rights and exploring your options for replacement transportation.
We’ll also outline how the Mighty.com AI claims helper can assist with every aspect of recovering from the situation.
What Is a Totaled Car?
A car is considered "totaled" by insurance companies when the cost to repair the damage exceeds the vehicle's actual cash value (ACV).
ACV is the estimated market value of the vehicle before the accident, considering factors like age, mileage, condition, and any existing damage.
Essentially, if it's more expensive to fix the car than it's worth, the insurance company will typically declare it a total loss.
How To File an Insurance Claim on a Totaled Car
While every insurance company works differently, the basic filing process is largely the same.
- Contact your insurance company: Notify your insurance company as soon as possible after the accident. Provide the basic details of the incident, such as the date, time, and location.
- Gather documentation: Collect all relevant documents, including the police report, photographs of the vehicle damage, and any medical records if applicable.
- File the claim: You can typically file a claim online, over the phone, or by mail. Follow the instructions provided by your insurance company.
- Cooperate with the insurance adjuster: Be prepared to answer any questions the adjuster may have and provide any requested documentation.
- Keep records: Maintain copies of all communication, documents, and correspondence with the insurance company.
That final point is an important one. Keep copies of everything, just in case.
How To Fight a Total Loss Settlement
If you believe your insurance company's initial offer for your totaled car is unfair, you can take steps to fight1 for a higher settlement:
- Obtain an independent appraisal: Hire a qualified auto appraiser to assess the value of your vehicle. This provides an objective estimate that you can use to support your claim.
- Research comparable vehicles: Gather information on recently sold vehicles like yours to demonstrate true market value.
- Negotiate with the adjuster: Be prepared to negotiate with the adjuster, presenting your evidence and explaining why you believe the initial offer is inadequate.
- File a complaint: If you’re unable to reach a satisfactory agreement with the insurance company, you may file a complaint with your state's insurance department.
You could consult an attorney or use the Mighty.com AI claims handler to assist. It’s entirely up to you.
Steps To Take When Your Car Is Totaled in an Accident
There are two stages of action to take if your car is totaled in an accident.
One happens immediately while the other happens once everyone is safe and at home.
- Ensure safety: Prioritize the safety of yourself and others involved in the accident.
- Contact emergency services: If necessary, call 911 for medical assistance and to report the accident.
- Document the scene: Take photos and videos of the accident scene, including vehicle damage, skid marks, and any visible injuries.
- Exchange information: Exchange contact and insurance information with the other driver(s) involved.
- Contact your insurance company: Notify your insurance company as soon as possible about the accident.
- Obtain a police report: Obtain a copy of the police report from the investigating officer.
- Seek medical treatment: If you have any injuries, seek medical attention immediately.
Once the initial situation has been addressed:
- Assess the damage: Determine the extent of the damage to your vehicle.
- File a claim: Contact your insurance company immediately to file a claim.
- Know your car’s fair market value: Research the actual cash value (ACV) of your vehicle using resources like Autotrader, Kelley Blue Book or Edmunds.
- Contact your lender (if applicable): If you have a loan on your vehicle, notify your lender about the accident and the potential total loss.
- Negotiate the claim with the insurer: Review the insurance company's settlement offer carefully. If you believe the offer is inadequate, negotiate for a higher amount.
- Get a new or used car: Use the insurance settlement to purchase a new or used vehicle.
Frequently Asked Questions
How Do You Determine if Your Car Is Totaled?
Every insurer is different but will likely follow a similar process to this:
- Insurance company assessment: The primary determinant is the insurance company's assessment. They compare the estimated repair costs to the vehicle's actual cash value.
- Cost vs. value: If the estimated repair costs exceed the vehicle's ACV, the insurance company will likely declare the car a total loss2.
- State regulations: Each state has specific regulations regarding the threshold for declaring a vehicle a total loss. These thresholds often involve a percentage of the vehicle's value.
What Is the Book Value of a Car?
The book value of a car often refers to its actual cash value (ACV).
It’s an estimate of the car's current market value, considering:
- Age: Older cars generally have lower ACV due to depreciation.
- Mileage: Higher mileage typically results in lower value.
- Condition: Wear and tear, previous accidents, and overall maintenance history impact ACV.
- Market: Current market demand for the specific make and model can also influence ACV.
You can use resources like Autotrader, Kelley Blue Book (KBB) and Edmunds to provide estimates of a vehicle's ACV based on these factors.
Just remember to compare like for like, including mileage, trim level and any upgrades.
What Insurance Policies Cover a Totaled Vehicle?
The following insurance policies typically cover a totaled vehicle:
- Collision coverage: This covers damage to your vehicle resulting from a collision with another vehicle or object.
- Comprehensive coverage: This covers damage to your vehicle from events other than collisions, such as theft, fire, vandalism, hail, or animal strikes.
How Do Insurance Companies Determine a Total Loss?
We covered this briefly earlier, but here’s a little more detail.
Insurance companies determine if a car is totaled by comparing the estimated repair costs to the vehicle's ACV.
Key factors:
- Repair costs: Insurance companies obtain estimates from repair shops to determine the cost of necessary repairs.
- Actual cash value (ACV): This is the estimated market value of the vehicle before the accident, considering factors like age, mileage, condition, and market trends.
- Salvage value: This is the estimated value of the damaged vehicle for salvage or scrap.
- Total loss threshold: Most states have a threshold, often around 70-80%, where if the cost of repairs exceeds this percentage of the vehicle's ACV, the car is typically declared a total loss.
My Insurer Wants To Total My Car but I Want To Keep It – Can I?
In most states, you usually have the option to keep your totaled car.
However, there are some important considerations:
- Buyback option: You may be able to buy back your totaled car from the insurance company for its salvage value. This allows you to keep the vehicle and attempt repairs yourself.
- Salvage title: If you keep the car, it will likely receive a salvage title, which can significantly impact its future value and insurability.
- Repair costs: Carefully weigh the potential costs of repairing the vehicle against the settlement amount offered by the insurance company.
- Safety concerns: Ensure that the vehicle can be safely repaired and will pass any necessary safety inspections.
Different states have different rules around vehicle salvaging to check yours before asking for your car back, just in case!
How Much Can I Expect From an Insurance Settlement?
The amount you can expect from an insurance settlement for a totaled car varies greatly.
Factors include:
- Vehicle ACV: This is the primary determinant. Age, mileage, condition, and market trends significantly impact ACV.
- Insurance coverage: Your specific policy limits and coverage (collision, comprehensive) will determine the maximum payout.
- Deductible: You'll be responsible for paying your deductible before receiving any insurance payment.
- Salvage value: The insurance company may deduct the salvage value of the vehicle from the settlement amount.
- Negotiation: The final settlement amount often depends on negotiations between you and the insurance company.
You’ll see these factors repeated a lot in this post as they form the backbone of any claim.
What Happens if You and the Insurer Disagree on Your Car’s Value?
If you disagree with the insurance company's valuation of your totaled vehicle, you have several options:
- Negotiate: Present your evidence, such as an independent appraisal or research on comparable vehicles, to the insurance adjuster. Explain why you believe the initial offer is inadequate. Be prepared to negotiate and counteroffer.
- Obtain an independent appraisal: Hire a qualified auto appraiser to provide an independent assessment of your vehicle's value. This can strengthen your position during negotiations.
- File a complaint: If negotiations fail, you can file a complaint with your state's insurance department.
What if the Total Loss Wasn’t My Fault?
If the accident that totaled your car was not your fault, you should generally not experience any negative impacts on your insurance premiums.
- Fault determination: Your insurance company will investigate the accident to determine fault.
- No fault claims: If you are found not at fault, your insurance premiums should not be affected.
- Uninsured/Underinsured motorist coverage: If the at-fault driver is uninsured or underinsured, your own uninsured/underinsured motorist coverage may cover any remaining losses.
What Is the Fair Market Value of a Car?
The fair market value (FMV) of a vehicle is the estimated price at which it would sell in an open market.
This is defined as a sale between a willing buyer and a willing seller, neither of whom is under compulsion to buy or sell.
Value is also determined by:
- Age and mileage: Older vehicles with higher mileage generally have lower FMV.
- Condition: Factors like wear and tear, previous accidents, and overall maintenance history significantly impact FMV.
- Market demand: Current market demand for the specific make and model influences FMV.
- Options and upgrades: Features like leather seats, sunroof, and premium sound systems can increase FMV.
What Do You Do With Your Car Insurance After a Total Loss?
After your car is totaled, you'll need to consider your insurance coverage options:
- Maintain coverage: If you plan to purchase a replacement vehicle, continue your insurance. Update your policy to reflect the new vehicle information.
- Adjust coverage: You may be able to adjust your coverage levels based on your needs and budget. Consider factors like the value of your new vehicle and your driving habits.
- Shop for new rates: Explore options with other insurance companies to find more competitive rates for your new vehicle.
- Review policy documents: Carefully review your new policy to understand your coverage limits and any exclusions.
What Is the Total Loss Formula?
While there isn't one single, universal total loss formula used by all US insurance companies, the core concept involves comparing the cost of repairs to the vehicle's value3.
The formula will usually include:
- Repair costs: The estimated cost of parts and labor to repair the vehicle to pre-accident condition.
- Actual cash value (ACV): The estimated market value of the vehicle before the accident, considering age, mileage, condition, and market trends.
- Salvage value: The estimated value of the damaged vehicle for scrap or parts.
- General principle: If the estimated repair costs plus the salvage value exceed the vehicle's ACV, the insurance company is likely to declare it a total loss.
How Do States Define Totaled Cars Differently?
While the core concept of a totaled car (repair costs exceeding the vehicle's value) remains consistent, states vary in how they define the specific threshold.
Some states have specific statutory thresholds.
For example, a state might define a vehicle as totaled if the repair costs exceed 75% of the vehicle's actual cash value (ACV).
Other states may have broader guidelines, allowing for more flexibility in determining a total loss based on factors beyond just the repair cost percentage.
- Consideration of safety: Some states may consider factors beyond the cost-to-value ratio, such as the severity of the damage to safety-critical components.
- Impact on drivers: These variations in state laws can significantly impact the outcome of a total loss claim, including the settlement amount and the options available to the policyholder.
What Happens if You Totaled a Financed Car?
If your financed car is totaled, the insurance company will typically pay the settlement amount to your lender first.
- Loan payoff: The insurance payment will be used to pay off the outstanding balance on your car loan.
- Excess funds (if any): If the insurance settlement exceeds the loan balance, any remaining funds will be paid to you.
- Loan balance exceeds settlement: If you owe more on your loan than the insurance settlement amount, you may be responsible for paying the remaining balance.
What if You Still Owe Money When Your Car Is Totaled?
If your car is totaled and you still owe money on it, the insurance settlement may not fully cover your loan balance.
Here's what typically happens:
- Insurance pays the lender: The insurance company will typically pay the settlement amount directly to your lender to cover the outstanding loan balance.
- Loan balance exceeds settlement: If the loan balance exceeds the insurance settlement, you are responsible for paying the remainder.
- Gap insurance: This optional coverage can help bridge the gap between the insurance settlement and your outstanding loan balance.
What if the Insurance Payment Isn’t Enough To Pay Off Your Loan?
If the insurance settlement for your totaled car is less than the amount you still owe on your loan, you may face a financial shortfall.
Consider:
- Loan responsibility: You will still be obligated to repay the remaining balance of your car loan.
- Gap insurance: If you have gap insurance, it can help cover the difference between the insurance settlement and your outstanding loan balance.
- Financial hardship: If you don't have gap insurance, you may experience financial hardship due to the unexpected out-of-pocket expense.
Should I Get GAP Insurance?
Gap insurance is an optional coverage that can be valuable for drivers who finance a vehicle.
It covers the difference between the actual cash value (ACV) of your vehicle and the outstanding balance on your car loan in the event of a total loss.
When gap insurance is beneficial:
- New cars: New cars depreciate quickly, so you may owe more on your loan than the car is worth, especially early in the loan term.
- Long loan terms: Longer loan terms increase the likelihood of owing more on the car than its value.
- Low down payments: If you made a small down payment or financed the entire vehicle, you're more likely to owe more than the car is worth.
Considerations:
- Cost: Gap insurance has an additional cost, so weigh the potential benefit against the premium.
- Alternatives: Some lenders may offer their own form of gap coverage.
How To Get a New Car After a Total Loss
After your car is totaled, you'll likely use the insurance settlement to purchase a replacement vehicle.
Here's a general overview:
- Understand your settlement: Determine the amount you'll receive from the insurance company so you know how much you have to spend.
- Assess your needs: Consider your budget, lifestyle, and driving needs.
- Research options: Explore new and used car options within your budget.
- Consider financing: Explore auto loan options from banks, credit unions, and dealerships.
- Test drive and compare: Test drive potential vehicles and compare features, prices, and fuel efficiency.
- Negotiate the price: Negotiate the price of the vehicle with the dealership.
- Finalize the purchase: Complete the necessary paperwork and finalize the purchase of your new vehicle.
Sources
- Car And Driver: How To Fight An Insurance Company Over a Totaled Car (https://www.caranddriver.com/car-insurance/a32619931/how-to-fight-insurance-company-totaled-car/)
- Quantrell Collision: Signs Your Car Is Totaled: What To Look For? (https://www.quantrellcollision.com/signs-that-your-vehicle-may-be-totaled/)
- CarInsurance.com: What are the total loss thresholds in each state? (https://www.carinsurance.com/Articles/total-loss-thresholds.aspx)
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About the author
Joshua is a lawyer and tech entrepreneur who speaks and writes frequently on the civil justice system. Previously, Joshua founded Betterfly, a VC-backed marketplace that reimagined how consumers find local services by connecting them to individuals rather than companies. Betterfly was acquired by Takelessons in 2014. Joshua holds a JD from Emory University, and a BA in Economics and MA in Accounting from the University of Michigan.
