Totaled Car Guide

If your car is totaled and you're not at fault, you should file a claim with the at-fault driver's insurance company and report the accident to your own insurer as well. The other driver's property damage liability coverage will reimburse you for your car's actual cash value up to their policy limits. Actual cash value, or ACV, is the amount the car was worth immediately before the accident.

In the event that the other driver does not have insurance, you can file a claim with your uninsured motorist or collision coverage, if you have it. You can also file a collision claim if the other driver refuses to admit fault. In this case, the insurance companies will eventually determine who is responsible. Then, your insurer will recoup the cost of your collision claim and deductible in a process called subrogation. 

Insurance companies decide if a car is totaled by comparing the cost of repairs to the car's value.  Exact formulas vary by state and insurance company. However, it's worth noting that repairs are often more extensive than they appear, and even a small accident can sometimes total a vehicle.

You can fight an insurance company over a totaled car's value by sending the insurer a counteroffer along with evidence justifying your car's value. If the insurance company does not raise its offer, you can contact your state's insurance regulator, seek arbitration, or file a lawsuit. However, it's important to remember that insurance companies are only required to pay a car's actual cash value (ACV), not the cost of a replacement car or the original price you paid for the vehicle.

Car insurance companies and state laws determine when a car is declared a total loss, so it is unlikely that you will be able to keep your insurer from totaling the car if they deem it necessary. But you can negotiate with your insurance company if you think the amount they propose the car is worth is less than the car's ACV.  

How to Fight the Insurance Company About a Totaled Car

1. Receive a settlement offer from the insurance company.
2. Gather evidence, including an independent appraisal, the car's sticker details, prices for comparable vehicles, photos of the car before the accident, and receipts for any features you added.
3. Send this evidence and a counteroffer to the insurance company.
4. If the insurance company does not negotiate to your satisfaction, contact your state's insurance regulator to request help.
5. Ask your insurance company for third-party arbitration if necessary.
6. File a lawsuit as a last resort.

It's in the insurance company's interest to prevent a dispute from escalating, so sending a counteroffer directly is the best place to start. Otherwise, the cost of filing a lawsuit is usually not worth the potential rewards, but it depends on your situation.

If your car is totaled and you still owe money on the loan, the insurance company will pay your lender for the car's value, and you will be responsible for any remaining balance if the check is less than the loan amount. If you have gap insurance, it will cover the difference between the car's value and the loan balance. Otherwise, you will need to continue making payments for as long as it takes to bring your loan balance to zero.

If your car is totaled and another driver is at-fault, their liability insurance will pay for the car's value up to their policy limits. If you were at fault, you can file a collision claim. After you receive a settlement from the insurance company, you can determine if you still have a balance left on your loan.

After your lender has gotten the insurance check, you can file a gap insurance claim immediately, assuming you previously purchased coverage and still owe money to your lender. Be sure to follow any instructions in your policy. For instance, some gap insurance policies instruct you to continue making payments to your lender until the claim can be processed.

Unfortunately, your options are limited if you don't have gap insurance and your total loss check does not cover your loan balance. You can try to negotiate with the insurance company to have them increase their estimate of your car's value. However, you will need evidence that your car was worth more than the insurer calculated, and there is no guarantee that you will get more money. Otherwise, you are stuck continuing to make payments, though you could try asking your lender for a payment plan.

If you total your car with no collision insurance, then your insurance will not reimburse you for the value of your vehicle. Collision insurance pays to repair or replace your car after an accident, so without it, you might have to pay out of pocket to replace the car.

If the accident is your fault and you don't have collision insurance, your best option is to sell the car in its current state. You will still be able to recover something through the salvage value, which is the amount of money that a salvage yard will pay for the parts and frame.

On the other hand, if the accident is not your fault, then the at-fault driver's property damage liability insurance will cover the cost of your loss, up to their policy limits. In this case, you will still be reimbursed for the value of your car even if you don't have collision insurance. However, if your car's value exceeds the at-fault driver's liability limits, you will have to file a claim using uninsured/underinsured motorist coverage, file a lawsuit against the driver, or cover the remaining costs yourself.

Collision insurance is not required by any state laws, but you will need to carry it if your car is leased or financed. In general, it's a good idea to carry collision insurance if you can't afford to replace your car and the annual cost of coverage is less than 10% of your vehicle's value.

If your car is totaled and you only have liability insurance, you will have to pay to replace the vehicle yourself or file a claim with the other driver's insurance company. Liability coverage alone does not protect your car in any way, just injuries and damage you may cause to others. You need to have collision, comprehensive, or new car replacement coverage if you want your insurance company to pay to replace a totaled car. However, if your vehicle is damaged or totaled in an accident that isn't your fault, you should make a claim on the at-fault party's property damage liability policy to get your car repaired or replaced.

Only Having Liability Insurance Will Not Cover:

• Damage to your vehicle from an accident.
• Damage to your vehicle from fire, hail, flooding, fallen trees/limbs, or animal strikes.
• Injuries you or your passengers incur.
• Theft or vandalism of your vehicle.

On the other hand, collision coverage would help if you cause a run-in with another vehicle or object that totals your car. Comprehensive coverage would apply to damage caused by a fire, storm, or animal encounter, as well as if your car is stolen. Finally, new car replacement coverage would let you recover the full value of a newly purchased vehicle that gets totaled.

After a car is totaled, gap insurance covers the balance between what is owed on a driver's loan or lease contract and what is paid to the lender by their collision or comprehensive insurance policy, or another driver's liability insurance. A claim must be filed and verified before a gap insurance provider will make a payment.

How Gap Insurance Works After a Car Is Totaled

1. The policyholder files a claim with their gap insurance provider as soon as the car is declared totaled by their primary insurance provider.
2. The gap insurance provider will verify the car has been totaled due to a covered cause.
3. The driver's primary insurer pays for the actual cash value of the vehicle, minus any applicable deductible.
4. The gap insurance provider pays the difference between the primary insurance payout and what's still owed on the loan/lease contract.

An insurance company will “total” a car when the damage to the vehicle is so severe that the cost to repair it exceeds a certain percentage of the car's actual cash value (ACV), depending on the insurance company's policies and state law.

If you think you might need gap insurance coverage, contact your primary insurance provider, and possibly your lender, to see if gap insurance makes sense for your personal situation. Some gap insurance providers only sell policies to original loan/lease holders within a short period of time after the contract is signed, but others will sell a driver gap insurance as long as there is a need, no matter the age/condition of the vehicle.

Finally, it's important to note that gap insurance is different from loan/lease payoff plans, which customers can purchase at any time if they have an active contract on their car. While gap insurance will pay the entire difference between a financed vehicle's ACV and the contract's balance, and often any deductibles, loan/lease payoff plans only pay a maximum percentage of a car's ACV and don't generally cover deductibles.

An insurance company determines the value of a totaled car by considering factors such as the vehicle's make and model, year, and mileage. A vehicle is considered totaled when the cost of repairs approaches or exceeds the car's actual cash value (ACV), which is what the insurer says the car was worth prior to being damaged. If the insurer declares the vehicle a total loss, they will pay out any insurance claims based on the ACV.

Factors That Affect a Car's Actual Cash Value (ACV)

• Make and model
• Year
• Mileage
• Depreciation
• Accident history
• Mechanical problems
• Wear and tear
• Cosmetic problems
• Local demand for similar vehicles
• Sale prices of comparable vehicles in the area

It's important to keep in mind that the ACV is not the same as the cost of purchasing a replacement vehicle of the same year, make and model. Vehicles begin to depreciate quickly after they're driven off the lot, so even if your car is relatively new, the ACV will probably be significantly lower than what you paid for the vehicle in the first place.

If you think your insurer's ACV calculation is too low, then you should send a counteroffer that includes your justification for why the car was worth more prior to being totaled. This may include an independent appraisal, receipts for any features you added, and prices of comparable vehicles. There are several resources online that you can use to research your car's value, including NADA Guides and Kelley Blue Book.

To learn more, check out WalletHub's guide to totaled cars.

State Farm considers a vehicle a total loss when it has been damaged beyond repair or its damage will cost more to repair than the car's actual cash value (ACV). A vehicle that is considered a total loss by State Farm will not be worth the time, money and effort to restore, according to State Farm's insurance adjusters.

When you have an accident in your vehicle, or your car is damaged in some other way, like a tree limb falling on it, State Farm will evaluate the damage to determine whether or not the vehicle is totaled. To do this, State Farm takes several factors into consideration, including the extent of the vehicle's damage and the current cash value of the car.

State Farm Total Loss Considerations

• The cost of repairs vs. the vehicle's actual cash value, based on the vehicle's year, make, model, mileage, and condition.
• Whether or not the vehicle can be repaired safely.
• Whether or not the damage to the vehicle meets the state's requirements to declare a total loss.

Some states use a “total loss threshold” rule when declaring a car totaled, meaning that the state will total a car if the damage exceeds a set percentage of its value. Other states use a “total loss formula,” which is based on whether or not the cost of repairs plus the scrap value of a vehicle equals or exceeds the car's actual cash value.

Once State Farm has deemed a vehicle a total loss, a customer should collect any personal possessions that are still in the vehicle, including license plates and registration paperwork. They will then need to transfer their title to State Farm, as the insurance company will be responsible for disposing of the totaled vehicle. This also makes it easier for State Farm to deal directly with lenders if the car is financed or leased.

Progressive will determine whether a vehicle is a total loss by doing an inspection on the car to assess whether the car can be repaired and whether those repairs will cost more than the car's current value. The car will also have to fulfill the state's criteria for a total loss.  

Some states require Progressive to declare a total loss if the cost to repair a car exceeds a certain percentage threshold of the car's value. That percentage will vary by state. For example, a car with damage equaling 75% of its value is considered totaled in New York, but not in Texas, where the damage has to be equal to 100% of the car's current value. There are 22 states, including Delaware, California and Georgia, that use a total loss formula instead of a percentage threshold. In these states, Progressive will total your car if the cost of repairs plus the car's scrap value equals or exceeds its actual cash value.

If your car is declared a total loss, the title is transferred to Progressive, which will then dispose of the vehicle. Depending on your insurance coverage, Progressive might provide you with a replacement, a claim payout, and sometimes a rental vehicle to use in the meantime. Progressive normally pays out your car's cash value directly to you or to your leasing or financing institution.

Finally, it is worth noting that in recent years, Progressive was involved in class action lawsuits related to the way it values vehicles that are declared a total loss. These complaints alleged that Progressive purposefully undervalued comparable vehicles when evaluating total loss claims. Legal proceedings are still ongoing.

A salvage title is a title issued for a car that an insurance company has declared a total loss, meaning the vehicle is too damaged to be worth repairing. The salvage title will stay in place unless the car is repaired and inspected, after which the driver can get a “rebuilt” title and legally drive the car again. 

After it's damaged, a car could also be designated “non-repairable” or issued a “junk” title. That would mean the damage is so extreme that no one is even allowed to rebuild the car. Instead, the vehicle could be sold for parts or destroyed.

Since a salvaged car is less damaged than a non-repairable car, you're allowed to rebuild it. However, some insurance companies worry that rebuilt cars aren't worth their sticker price. The quality of the repair work matters a lot, and issues could still show up down the road.

That doesn't mean you can't get insurance for a car that previously had a salvage title. It just means that you might have to search a little harder to find insurance, and that you might not be able to get the same coverage you could get for a non-salvaged car.

There are a few major insurers that sell coverage for previously salvaged cars, including Progressive and The Hartford.