When Is a Car Considered Totaled?

A Closer Look at What Makes a Vehicle a Total Loss

Image by Vin Ganapathy © The Balance 2019 

“Is my car totaled?” is a common question asked after a severe accident. A totaled car, or a total loss, is one that the insurance company would rather not pay to repair, because they've deemed it not worth the cost—they'd rather pay for you to get a new one.

However, the idea of defining a car as totaled (or not) only matters if you have comprehensive coverage.

If you only have liability coverage, and you total your vehicle, you'd better have a lot of money saved up, because not one cent of the damage to your own car is going to be covered. This is true whether you get into an accident, a tree falls on top of your car, a hailstorm pummels your car, or your car is stolen. But if you have collision and comprehensive coverage, you’re probably wondering whether or not you’re going to have to give up your totaled vehicle forever or just for as long as it takes to make repairs. (If you’re wondering whether you have to actually make the repairs once the insurance company has paid for them, the answer is complicated).

Many times, you would be amazed what a body shop can fix. Other times, with severe damage, you are much better off not repairing the vehicle and taking the total loss settlement from your insurer, as long as you're covered by your insurance policy. In this article, you’ll learn more about what goes into determining whether a vehicle is a total loss and whether or not you can keep a totaled car.

Key Takeaways

  • Insurance companies declare a car to be a total loss if the damages exceed the market value.
  • State laws determine when an insurance company can declare your car totaled.
  • Airbag replacement can exceed the value of a vehicle after an accident, but not always.

A Totaled Car Is Determined by State Requirements

Different states have different definitions of a total loss vehicle. Some states consider a car totaled by using the guidelines that if a vehicle's damage exceeds 80% of the actual cash value, it's headed for the junkyard. Claims adjusters use specialized computer software to determine the cost of the damage versus the actual cash value. So, whether your car is totaled depends on your individual insurance company’s methods of calculating total loss, as well as your state’s laws.

Is the Car Automatically Totaled If My Airbag Deploys?

It is often said that a deployed airbag means a vehicle is totaled, which is not always true. The reason so many people believe this is because a high percentage of vehicles are totaled after the airbag deploys for a couple of reasons. Lots of people carry comprehensive coverage on aging vehicles, which have highly depreciated. Airbags are very expensive, upwards of $1,000. So, when an older-model vehicle has a deployed airbag, plus the body damage that caused the airbag to deploy in the first place, it often won't be worth repairing—meaning that the car is totaled.

Example: John has a nine-year-old vehicle and carries comprehensive coverage on his insurance policy. He hits a deer on the highway, and his airbag deploys. The cost of replacing the airbag and the physical damage to the front end exceeds the total actual cash value of the vehicle. His insurance company totals his vehicle out because it's not worth fixing.

Newer vehicles, depending on their value, could possibly be repaired. A new Hyundai Accent with a deployed airbag could fairly easily become a totaled car, whereas a new Cadillac Escalade might still be worth fixing.

Example: John is driving his six-month-old Cadillac Escalade on an icy highway. A traffic backup leaves him unable to stop, and he rear-ends another vehicle. His airbag is deployed, and there is front-end damage to his vehicle. The damage reaches 50% of the vehicle's actual cash value, so the insurance company repairs John's vehicle.

Can I Keep a Totaled Car?

It is possible to buy back your vehicle with a salvage title once it is deemed a total loss, though that is not usually a great idea, for a variety of reasons. Insurance companies pay actual cash value for a totaled car, minus the deductible. You have the option to pay the insurance company a small fee plus the salvage value of the vehicle in some states. Once you buy the vehicle back, it is yours to do with as you please. You will need to check with your insurance company to see whether any restrictions apply to insuring a vehicle with a salvage title.

Knowing whether or not your vehicle is totaled is the first step in the claims process. If you are still unsure whether or not your car is totaled, file your claim and ask your claims adjuster for more information. It is times like these in which you'll learn a lot about the quality of the customer service provided by your insurance company.

Frequently Asked Questions (FAQs)

How do you fight an insurance company's decision on totaling a car?

Insurance companies are usually the ones who make the call on whether your car is totaled or not. If you think they've misjudged your situation, you can get it independently appraised. If the independent appraisal is significantly different than your insurance company's appraisal, then you may be able to negotiate the car's status. If you feel the insurance company has wronged you, you can contact your state's insurance department.

What happens when a leased car is totaled?

Your debt is not affected when you total a car. If you still owe money on the car, you will be expected to pay it off. Depending on how much you owe, the insurance payout may help to cover your debt. Gap insurance is coverage you can get to prevent exactly these kinds of situations; if you total your car before you pay it off, gap insurance will give you the money you need to settle your debt.

Where can you sell a totaled car?

If the insurance company doesn't keep the car, you can sell the totaled car to anyone who wants it as long as it has a salvage title. Some dealers or salvage specialists may be willing to buy it from you, but you may have to try to find a private individual who is willing to buy it.