My Car Is “Totaled.” What Does That Mean?

Wondering how to fight an insurance company over a totaled car? You have landed at the right place!

The consequences of a car wreck can be really nerve-wracking, especially when your car gets labeled “total loss.” Total loss means that the vehicle can’t be repaired or that the repair cost of the damage exceeds the vehicle’s value. However, it doesn’t mean that there’s nothing you can do.

Totaled car insurance helps you pay for a new vehicle if yours gets totaled. If you have the right coverages, the insurance company will be liable to give you a settlement.

Keep on reading this article to know what to do with a totaled car with no insurance and how to fight an insurance company over a totaled car. So, let’s jump in!

How Is Your Totaled Vehicle Covered on Your Policy?

You likely know now the answer to the question, “What does a totaled car mean?”

The three types of coverage that can protect against a totaled vehicle include comprehensive coverage, collision coverage, and underinsured and uninsured motorist coverage.

Let’s talk about each one of them in detail.

Collision Coverage

Collision coverage pays for the repairing costs when the vehicle gets damaged in an accident with another car or object. In circumstances when the repairing costs exceed the vehicle’s current value, the insurance company pays the current market value of the vehicle.

The cost of collision insurance for an old vehicle is significantly lower than for a new one. Even though the collision coverage is optional, it is mostly required by the vehicle’s leaseholders and lenders.

Comprehensive Coverage

It’s coverage that pays for damage to your car caused by theft, hail, vandalism, and fire. So, if your car catches fire or gets hit by a deer, comprehensive coverage may cover the damages.

Moreover, it also can help replace your car. The replacement cost depends on the vehicle’s actual cash value (ACV). Similar to collision coverage, comprehensive coverage is optional too. However, if you’re paying a loan or lease on your vehicle, you will likely be required by the leaseholder to carry comprehensive coverage.

Uninsured and Underinsured Motorist Coverage

If the at-fault driver doesn’t have insurance, uninsured motorist coverage will pay the medical bills and, in some cases, repair costs for the damages caused to your vehicle. In contrast, underinsured motorist coverage will pay for medical bills when the at-fault driver doesn’t have sufficient insurance.

In certain states, this type of coverage is mandatory, while in others, it’s optional.

Where Do Cars Go When They Are Totaled?

The totaled cars are sent to the junkyards, where their usable parts are sold, and the remnants are sent to a car crusher.

Is It Possible to Keep My Car if Insurance Totals It?

You might be wondering what to do when your car is totaled. There’s a lot you can do. You can even keep the totaled car and repair it yourself. When the total loss of your vehicle is declared, you will receive the car's actual cash value from the insurance company.

Keep in mind that the insurance will pay out the actual cash value minus the deductible and the salvage value.

What Do Insurance Companies Do With Totaled Cars?

The insurance companies sell the totaled cars to a salvage vendor. If your car is totaled but still drivable, the insurance company will give you the option to keep the car. However, the insurance will deduct the salvage value from your settlement money.

How “Actual Cash Value” Is Calculated

Wondering, how is your car's value decided? You can either use calculators and tools or research on your own to determine the value.

You can calculate your car’s actual cash value by determining what you would have to pay to replace your vehicle with a similar kind. Once you have determined the value, deduct the cost of general wear and tear and past damages that have not been repaired.

Most insurance companies have depreciation calculators, i.e., total loss car value calculator, to gather information about your vehicle and calculate the numbers for you.

Actual Cash Value vs. Replacement Cost

The main difference between actual cash value and replacement cost is that replacement cost refers to the cost of replacing the damaged goods with materials of similar kind and quality with no deduction for depreciation. In contrast, the actual cash value is calculated by subtracting depreciation from replacement cost.

Situations and Solutions Regarding Your Totaled Car

In most cases, the insurance company will make a payout for a totaled car, depending on the vehicle's current value. But what happens when your leased car gets totaled, and you don’t have insurance?

We have compiled a list of different possible problems along with their solutions to help you better understand your options.

Situation	Solution
What happens if you total a leased car without insurance?	If you total a leased car and don’t have insurance, you will be liable for paying the outstanding balance on the lease out of your own pocket.
What happens if you total a financed car?	If you total a financed car, you will still owe money on loan. If you have insurance, the insurer will pay the actual cash value of the vehicle. However, you will be responsible for paying the remaining amount.
Do you lose money if you buy out a lease?	Lease buyout is worth it if the vehicle’s worth exceeds the residual value calculated at the start of your lease.
Do you get money back when returning a leased car?	If you take good care of the leased car, the residual value stated in the contract might increase. To pass the inspection with an A grade, you need to get the broken parts repaired and ensure that the car has everything it came with.
What happens when a financed car is totaled, and it wasn’t your fault?	If a financed car is totaled, but you are not at fault, you will still have to pay the remaining loan balance. Get in touch with the at-fault driver’s insurer with your lender details.
Do you still have to pay insurance if your car is totaled?	No, you don’t have to keep paying insurance if the totaled car is not drivable.
Insurance is not paying enough for the totaled car. What should I do?	If your insurance is not paying enough for a totaled car, you can try negotiating for a higher amount. You need to prove to the insurance company that your car’s value is more than what they have calculated.
What happens when a car is totaled, but you still owe on loan and have no insurance?	You’ll have to pay the borrowed amount on your own.
How does an accident affect a car lease?	You will still owe money to the leasing company, regardless of getting into an accident. However, your insurance might help pay some or most of the repairing costs at the time of returning a leased car after an accident.
What happens if you total a leased car?	If your leased car is totaled, the insurance will pay for the current vehicle value. However, in most cases, you will still owe something to the leasing company.
What happens when your car is totaled, but it's not your fault?	If your car is totaled, but it’s not your fault, the other driver’s insurance will pay your vehicle’s actual cash value up to their policy limits.
How much will insurance pay for my totaled car?	The cost paid by the insurance company is calculated by determining the vehicle’s actual cash value minus the deductibles of your selected coverages.
How much does it cost to buy back a totaled car from insurance?	Most insurance companies allow you to buy back the totaled vehicle. However, you’ll need to pay the salvage value determined by the insurer.
What to do with a totaled car and no insurance?	Your best bet is selling the vehicle and putting the money towards the next car.

Does Insurance Cover a Totaled Car?

Most insurance companies don’t insure cars that have been totaled. You can get liability coverage, but it may be difficult to obtain more extensive insurance options.

What Happens if the Insurance Payment Isn’t Enough to Pay off Your Loan?

If the amount paid by the insurer is not enough to pay off your loan, your best bet is to negotiate for a higher amount. If that doesn’t work out, having gap insurance might do the job. Gap insurance, also called loan/lease payoff, helps pay off the loan when the outstanding loan is more than the amount paid by the insurance company.

How to Negotiate Your Car's Value With an Auto Insurer After an Accident

By considering your car totaled, the insurance company is basically buying the car from you. The first thing you need to do while your vehicle is getting inspected at an auto body shop is to determine the car’s actual cash value.

Knowing the car’s current value is important when negotiating with the insurance company. Therefore, it’s best to do your own research and prepare a counteroffer. In most cases, the insurance company will keep the first offer low to see if you know what you are doing. If the insurer presents a low offer, make sure you ask them to justify it.

In certain cases, the insurer might ask for betterment charges. If you own an old car that has experienced some degree of wear and tear, it may need new parts that make it more valuable.

Betterment is the reduction in the reimbursement by the insurance company for the cost of new parts, so the payout is equivalent to the value of existing parts. To counter the betterment charges, you need to prove to the insurance company that the new parts will not increase the vehicle’s value.

Can You Fight a Total Loss Claim?

Yes, you can. If you think your totaled vehicle is worth the repair, you need to provide relevant evidence. Since insurance companies use their own databases to determine a vehicle’s value, they can be wrong with their offer.

How to Dispute an Insurance Total Loss on a Car?

To fight a company over a totaled car and get a reasonable settlement offer, you have to prove that your car is worth more than their numbers. You can share the receipt of upgrades such as new tires, paint jobs, window tints, and adding a turbocharger.

However, suppose the insurer still doesn’t increase their offer. In that case, you should turn to your local department of insurance to determine your car’s value and investigate whether the company was acting unjustly. If the insurance provider still doesn’t raise the offer, you will have to file a lawsuit against them.

What Happens if You Don't Agree with a Total Loss Adjuster?

If you don’t agree with a total loss adjuster, your best bet is to try to calmly work out a deal to pay for repairs. From fighting the betterment charges to receiving a reasonable settlement, you can do everything by negotiating. Write a letter to the independent adjuster sharing that you feel the total settlement doesn’t reach your expectations. However, if it still doesn’t work out, your last option is to fight the insurance company.

Can an Insurance Company Force You to Total Your Car?

The insurance company has the right to deem your car total loss after an accident. However, that doesn’t mean that you don’t have the option to keep it. So, if the insurance wants to total your car, but you want to keep it, you can.

What Happens to a Totaled Car That Is Still Drivable?

You can accept the insurance company’s decision to total your car but still choose to keep it. In this case, you will have to buy the car from your insurance provider. Typically, you’ll have to pay a sum similar to what the salvage yard would offer.

Someone Has Totaled My Car. Can I Sue?

You can sue the at-fault driver even if you don’t get physically hurt in the accident. In this case, you will file a property damage lawsuit to get paid for the damages incurred by the vehicle.

Total Loss Threshold Differs by State

Every state has its own total loss threshold.

Washington state’s total car percentage is determined by using the Total Loss Formula (TLF). TLF is equal to the vehicle’s fair market value minus its salvage value. So, a car is considered totaled in Washington state if the repairing cost exceeds the TLF outcome.
New York State's total car threshold is 75%.
In Alabama, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nebraska, New Hampshire, North Carolina, South Carolina, Tennessee, Virginia, West Virginia, and Wyoming, the total loss threshold is 75%.

My Car's Airbags Deployed — Is It a Total Loss?

A car’s airbags deploying doesn’t necessarily mean that the car will be deemed totaled. If the vehicle’s airbags deploy and the damage exceeds the total loss threshold of the state you are residing in, then only the car is considered a total loss.

How Can a Totaled Car Affect Your Credit Scores?

Accidents don’t directly impact the credit score because your credit report doesn’t include information regarding car accidents, driving records, and previous insurance claims.

Steps to Getting a New Car After a Total Loss

If you consider buying a new car after a total loss, here are a few steps to follow. If you have the right insurance, you can file a claim and receive the payout from the company to cover the loan payments or use the money to purchase a new car.

Report the claim immediately after the incident. If you own rental reimbursement coverage on your policy, the insurance will pay some or all of your rental costs or cover alternate transportation. This is to ensure that you can commute during the period your car is getting repaired.
Then you need to have the vehicle towed to the auto body shop for inspection.
If the insurance company declares your car a total loss and decides not to repair it, you will receive the vehicle’s actual cash value minus a deductible.
When you get to know the exact payout sum, you can negotiate for a higher price.
If you’re satisfied with the proposed amount, you have to sign the paperwork to receive the money.

In case you still own a car loan, keep in mind that the received ACV amount might not cover the complete loan costs. Therefore, you’ll have to pay the rest of the money from your own pocket. However, if you don’t have a loan, you can use the ACV to buy a new car. So, how soon can you get a new car after a total loss? You can buy a new car immediately. However, it’s best not to rush into a purchase because it might give the dealer the leverage.

In Conclusion — Making the Most Out of a Wrecked Car?

We hope that you now know how to fight an insurance company over a totaled car. Make sure that you have gap insurance because it helps pay off the loan when the amount paid by the insurer is less than the outstanding loan payment.