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.

By , J.D. · Villanova University School of Law
Updated by Stacy Barrett, Attorney · UC Law San Francisco

If your vehicle is damaged in a car accident, an insurance company might decide it's a "total loss" (totaled). When that happens, you'll likely have questions: What does "total loss" mean? Is it a good or bad thing? Can I dispute the decision and keep my car?

Here's what you need to know:

  • An insurance adjuster's total loss determination is based on how much it'll cost to repair your car and your car's actual cash value (ACV) at the time of the accident.
  • The type of insurance coverage that kicks in to pay for a totaled car depends on the circumstances of the accident.
  • In some situations, you might be able to keep, sell, or donate a totaled vehicle.
  • If you're upside down on your car loan—you owe more than your car is worth—gap insurance can help pay the difference between your totaled car's ACV and the amount you still owe on your loan.

What Does It Mean When a Car Is Totaled?

A car is a total loss when it can't be fixed or it'll cost more to repair than the car is worth. Insurance adjusters decide whether to repair or total a car based on formulas that vary by state and insurer.

Roughly half of the states use a method called the Total Loss Formula (TLF). In these states, adjusters add the cost of repairs and the scrap value of the car. If these two numbers equal or exceed your car's actual cash before the accident, then the insurer will total your car.

The remaining states use the threshold method, which requires insurers to total a car when the cost to repair it is more than a certain percentage of the car's ACV. The most common percentage is 75%, but thresholds vary from as high as 100% to as low as 50% in some states.

Can I Dispute an Insurer's Decision to Total My Car?

You don't have to accept the insurance company's decision to total your car. You can negotiate with your own insurance company or the insurance company of the person or entity responsible for the accident, typically the at-fault driver.

If you think the insurer you are dealing with has underestimated the actual cash value of your car, you can:

  • ask for a copy of the vehicle valuation report
  • provide proof (receipts, photos) of the pre-accident condition of your car and upgrades
  • do your own research on your car's ACV, and
  • hire your own appraiser.

If your research and evidence support a higher ACV than the insurer's offer, you'll have more leverage to negotiate. Insurance adjusters have an obligation to negotiate in good faith. If they don't, you can file a complaint with your state's insurance commission or better business bureau.

You can also try to dispute the adjuster's estimate for repairs. If you can convince the insurance company that you can fix the car for less than what the car is worth, you might be able to avoid a total loss designation.

Who Pays for My Totaled Car?

After a total loss accident, insurance will likely play a big role in your settlement. The insurance coverage that kicks in to pay for your totaled car often depends on who's at fault for the accident.

What Happens If I'm at Fault for the Accident?

If you are legally responsible for an accident, you'll have to rely on your own collision and comprehensive car insurance to cover your totaled car.

Collision insurance pays for damage to your vehicle, regardless of who was at fault for the crash. Collision coverage pays out for car-on-car accidents and single car accidents. Most states don't require drivers and car owners to have collision insurance, but lenders often make it a condition of a car loan.

Comprehensive insurance covers non-collision damage, like damage caused by a falling tree, severe weather, fire, theft, and vandalism. Depending on your policy, comprehensive insurance may also cover damage from hitting an animal.

If your car is totaled in an accident that you caused and you don't have collision or comprehensive coverage, you'll get no money for your totaled car.

What Happens If I'm Not at Fault for the Accident?

In most states, the person who is at fault for the accident is liable (legally responsible) for paying for property damage. Nearly all states require drivers and car owners to have liability insurance to compensate other people for accident-related losses.

If your car is totaled in an accident that isn't your fault, you can file a claim with the at-fault party's liability insurer. Liability insurance doesn't pay for damage to the at-fault party's car.

If the at-fault party is underinsured or uninsured, you'll have to rely on your own uninsured motorist insurance (UIM) to pay for your damages or you can file a civil lawsuit against the at-fault party.

The Total Loss Claim Process

The total loss claim process starts with you making a car accident claim. You'll either make a claim with your own car insurance company ("first-party" claim), or with the at-fault party's insurer ("third-party" claim).

Depending on the circumstances of the accident and the specifics of the insurance coverage at play, you might receive a fair settlement offer for the actual cash value of your car quickly, or you might need to negotiate for a better offer.

Once you've agreed on a total loss settlement, the insurance company will pay out your car's ACV and you'll transfer the title to the insurer. If you own your car outright, the entire insurance settlement will go to you.

If you financed your totaled car, the insurer will pay your lender first. If your car's ACV is more than what you owe, you'll keep the difference. If your car's ACV is less than what you owe, you are still responsible for paying the balance of your loan.

Can I Keep, Sell, or Donate My Totaled Car?

If you don't want to sign the title over to the insurer, you can probably keep your totaled car and try to fix it or sell it yourself. Most states allow owners to keep totaled cars.

Some people choose to donate their totaled cars to charity. You can reach out to your favorite organization to see if they work with a car donation service or donate to a national organization like Breast Cancer Car Donations, Cars for U.S. Troops, or Make-A-Wish. You can support a worthy cause and potentially get a tax break.

If you decide to keep or donate your car, the insurance company will deduct the salvage value of the car from your settlement. If the car is financed, your lender might have a say in whether you can keep the totaled car.

What If I Owe More Than My Totaled Car Is Worth?

The actual cash value of your car might be more or less than what you owe on your car loan. Cars depreciate quickly so it's easy to get upside down on a car loan, especially if you put little or no money down.

If you total a financed car, you're still responsible for paying the balance of your loan. Gap insurance can help cover the difference between your car's ACV and what you owe on your loan.

Learn more about what happens when you still owe money on a totaled car.

What is Gap Insurance?

Guaranteed Auto Protection (or gap insurance) pays the difference between your car's actual cash value and the amount you owe on your car loan. You can purchase gap insurance through your lender or insurance company.

Learn the basics of gap insurance—what it is, who needs it, and how to buy it.

What Is New Car Replacement Coverage?

New car replacement insurance will pay out more than the actual cash value of your totaled car. Your settlement should be enough to cover the purchase of a car nearly identical to the one you lost. New car replacement coverage is an add-on to collision and comprehensive coverage for new cars with low mileage.

New car replacement and gap insurance both lead to larger payouts for totaled cars, but they aren't the same and you'll have to pay for them separately.

How Will I Pay For a New Car After My Car Is Totaled?

Your budget for a new car will likely depend on your insurance settlement and your financial situation.

If you own your car outright, you can use your entire total loss settlement to shop for a new car. If you owe money on your car, you'll have to balance paying off your old car loan with the purchase of a new car. Gap insurance and new car replacement coverage can help you get back on the road as quickly as possible.

Talk to a Car Accident Lawyer

You might be able to handle your own total loss claim. But if you were injured or you want to dispute the insurance company's decision to total your car, talk to a car accident lawyer.

An experienced car accident lawyer can answer your questions about the total loss process and explain your rights when you are negotiating a settlement with an insurance company.

Learn more about when to hire a lawyer after a car accident. You can also connect with a lawyer directly from this page for free.

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