Your car insurance can cover your vehicle if it is totaled, but it depends on the coverage available to you.  Read on to understand your options when you have a totaled car after an accident.

When is a Car Considered Totaled?

The term “totaled” generally refers to a damaged car whose cost of repair approaches or exceeds its value, or which is deemed “non-repairable” based on the extent of the damage.  An estimate is usually generated, which estimates vehicle damage and the extent of repairs necessary to bring the vehicle to its pre-accident condition. The fair market value of the vehicle will then be considered to determine if it is an appropriate candidate for repair or if it should be considered “totaled.”

In the event an insured is seeking coverage for a total loss under their own policy, those policy provisions play an important role in determining what the insured is entitled to recover. In addition, for all total loss claimants, the legal threshold to determine whether the extent of the damage or cost of repair justifies a total loss varies between states.  Each state, and sometimes each locality, have unique total loss laws that may guide the total loss claims process.

The Total Loss Car Claims Process

A totaled car is often one that has suffered a significant impact and damage.  This can frequently render the vehicle undrivable or unsafe, requiring it to be towed from the scene to either a storage or repair location.  It is important, and usually necessary, that the insurance company be notified of the loss as soon as possible to expedite handling of the vehicle damage, avoid unnecessary charges, and comply with policy conditions.

Soon after the claim process has been initiated, a vehicle inspection will be coordinated with the owner, repair facility, or storage location by the insurer’s claims adjuster. After the inspection process, the anticipated repair cost and the extent of vehicle damage is evaluated. If the vehicle is deemed a total loss based on this assessment, a settlement amount will be prepared and presented to the total loss claimant.

Determining Fair Market Value

To determine the Fair Market Value of your vehicle, a complete assessment of the car is performed.  In addition to the year, make, and model, the insurer will also consider the car’s overall condition, any pre-loss damage it may have suffered, as well as other factors to compare your car’s value to others similar in your market.  A complete assessment using industry-trusted resources will be prepared to establish the pre-loss value of your vehicle and any additional related payment items for which you are eligible.

In some cases where a claimant has made a claim for total loss under his or her own policy, changes made to the vehicle (aftermarket accessories or modifications) may not be eligible for coverage or may have limited coverage available under the terms of the policy.  In other cases, these items may actually detract or add to the vehicle’s value.

Line art - two cars in an accident - what happens when your car is totaled?

The Decision Whether to Retain a Total Loss

Even if the vehicle is totaled, the vehicle owner may be interested in keeping it.  While the insurer is still subject to state regulations and obligations to any lienholders, this option may be available.

Some states have specific laws related to your ability to retain a totaled vehicle.  In addition, some insurers may not even permit owner-retention after a total loss.  It is important to keep in mind that if you are able to keep your vehicle after it’s deemed a total loss, most states require vehicle titling changes.  The adjuster will have the information needed to help understand whether this option is available once the vehicle is totaled, and the steps necessary to move forward with the owner-retained process.

If the owner-retention process is initiated, the insurer typically offers payment for the full amount of the car’s pre-loss actual cash value, less any deductible owed, and the anticipated salvage recovery expected for the vehicle.  The salvage value is the anticipated value of the car in its damaged condition, which is typically recovered after payment of the claim by the insurer.

In the event the total loss claimant does NOT wish to retain the totaled vehicle, the adjuster will coordinate all necessary paperwork to ensure a smooth exchange of the title to the insurer.  This may include obtaining forms and documentation from you or your lender to facilitate a proper transfer of title to the insurance company.  Once the title is received and all paperwork is appropriately signed, a payment will promptly be issued.

Total Loss and Car Loans/Lienholders

Understanding the relationship to a lender or any lienholders on our vehicle’s title is important, as it may impact the payment receives from the loss.  During the total loss process, an insurer will obtain documentation from any lienholder on the totaled vehicle, along with proof of the amounts they are owed.  The insurer is obligated to pay the lienholder the amounts they are legally due out of the proceeds of the total loss settlement. Any additional amount exceeding these obligations are paid to the total loss claimant directly.


This material is intended for general information only and is only intended to help you understand the different aspects of the total loss claim handling process in general.  This information is not an insurance policy and does not refer or modify any policy provisions, limitations, or exclusions expressly stated in any insurance policy.  This information is expressly not intended, in any way, to provide legal advice or guidance on how to proceed with your total loss claim.  Please refer to your assigned adjuster and/or your policy contract for any specific information or questions on the applicability of coverage.

Coverages and other features vary between insurers, vary by state and locality, and are not available in all states. Whether an accident or other loss is covered is subject to the terms and conditions of the actual insurance policy or policies involved in the claim. References to average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation. We are not responsible for the content of any third-party sites linked from this page.