What Should I Do If My Car Is a Total Loss?

If your car is declared a "total loss" after an accident, your options will largely depend on available insurance coverage.

Especially after a more serious car accident, you could find yourself with a vehicle that's so heavily damaged, it's deemed a "total loss" by a car insurance company. When that happens, here are a few key takeaways:

  • A "total loss" declaration is dependent on your vehicle's "actual cash value" at the time of the accident.
  • The question of who is financially liable for a totaled vehicle is usually answered by who was at fault for the accident.
  • In some situations, you might be able to keep, sell, or donate a totaled vehicle.

What Does It Mean When a Vehicle Is "Totaled"?

In the broadest sense, a totaled car is one whose current value is less than the cost of repairing it. So if you have a car with a market value of $5,000, but it'll take $6,000 to repair the damage it received in a car accident, you can consider it totaled.

In reality, deciding if a car is totaled is a bit more complicated. Depending on the state they operate in, most car insurance adjusters will use one of the following two formulas in determining if and when a vehicle is a "total loss":

  • the cost to repair the vehicle exceeds a certain percentage of the car's value; in many states, the percentage is around 75%, or
  • the insurance company looks at the cost of repair and adds it to the car's salvage value; only when this sum exceeds the vehicle's actual cash value (ACV) will the insurance company declare the vehicle totaled.

Learn more about car insurance and repair options after a car accident.

If you've had an accident and your car insurance company has deemed your vehicle a total loss, you might have several options available to you.

Getting an Insurance Company to Pay for Your Totaled Car

If you want an insurance company to pay for your totaled car, you first need to figure out which car insurance company to work with. In most accidents, you'll have two choices: your car insurance company or the car insurance company for the other driver.

Who pays for your totaled vehicle will depend on who caused the accident, and the type of insurance coverage the at-fault party has in place. (Note that even if you're in a no-fault car insurance state, the at-fault party will likely still be on the hook for a totaled vehicle, since no-fault usually applies only to car accident injuries, not to vehicle damage.)

There are typically three possibilities:

  • If the other driver was at fault, you file a claim with the other driver's car insurance company, under their property damage liability coverage.
  • If you were at fault for the accident and you have collision coverage, you file a claim with your own insurance company.
  • If you were at fault and you don't have collision coverage, then you don't have any insurance policy to help pay for your totaled vehicle.

If your vehicle is totaled by a cause other than an accident (a tree falls on your vehicle or it gets destroyed in a fire, for example), comprehensive coverage (if you have it) would likely compensate you for the totaled vehicle.

Assuming there's an insurance policy you can rely on to pay for your totaled car, the insurance company could offer you one of two settlement options:

  • They'll pay for the purchase of a car that's similar to the one you just lost.
  • They'll pay you the ACV of the vehicle at the time of the accident. If you owned your car outright, you can spend this money however you wish. But if you still owed money on a car loan, then some of the money from the insurance company will go to your car loan lender to pay off any remaining balance. And if your vehicle was worth less than what you owed, you'll have to find a way to make up the difference to your lender. Get more details on what happens when you still owe money on a totaled car.

If you disagree with the insurance company's valuation of your vehicle, you can challenge the assessment by providing additional information showing why the insurer's numbers are wrong. This might mean hiring your own appraiser to value the vehicle, or sending documents to the claims adjuster that support your position that your vehicle was worth more.

For example, if you think the car insurance company has undervalued your vehicle because it didn't take into account the upgraded stereo system, brighter headlamps, and improved suspension system, submit receipts showing you made these upgrades before the vehicle became totaled.

Can You Keep, Sell, or Donate a Totaled Car?

If your car has sentimental value or you believe that you can effectively repair it yourself, you might ask the insurance company to let you keep it. You'll need to check and see if your state has any special "salvage"-related rules in place for doing this, especially if the vehicle is still drivable and you plan on using it.

Another thing to keep in mind is that you'll still receive a check from the insurance company, but it will only be for the vehicle's ACV less its salvage value.

If you know cars, you might be able to get more money if you sell the car yourself. For instance, you could sell it to a junkyard or car salvage yard. Or maybe there's an individual you know who's interested in buying it. Lastly, you can part it out and sell bits and pieces of the vehicle. This is what a salvage yard would do, but because you're doing it yourself, you can potentially get more money by cutting out the intermediary.

Finally, a multitude of charities accept working and totaled vehicles as donations. Depending on the charity, you can claim the value of the vehicle as a charitable tax deduction.

Do You Need a Lawyer?

If your vehicle has been labeled a total loss after an accident, it might make sense to discuss your options with an experienced attorney, especially if you've also been injured or there are other accident-related loose ends to tie up. Learn more about getting a lawyer's help after a car accident.

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