Getting Insurance After A Total Loss Vehicle

Understanding your insurance settlement options is crucial if your car is deemed a total loss after an accident. Enter your zip code below to receive a free auto insurance quote and explore your coverage options.

What Is A Total Loss Vehicle?

When your vehicle is in a car accident or a comprehensive loss and is damaged to the point that it would cost more to fix the car than it is worth, an auto insurance company will determine that your car is a "total loss." When your car is a total loss, the insurance carrier will determine your car's value at the time of the loss, and you will be paid accordingly if you agree to the amount they propose.

Putting a Price Tag on Your Totaled Vehicle

When an insurance carrier deems your car a total loss, they take into consideration the vehicle's actual cash value but also the additional costs that the company would incur if the car were repaired, such as the cost of providing you with a rental car while yours is being fixed and the amount of money they insurance company can sell the salvaged vehicle for.

An insurance company will determine your vehicle's actual cost value, including the amount it has depreciated since it was new. The carrier will use tools such as Kelley Blue Book, recent sales of similar vehicles, and the cost of work you have put into the vehicle recently (i.e., new tires or new brakes) to determine that value.

If the insurance company determines your car's value exceeds the repair estimate for the damages, it will offer you a settlement amount. If you were at fault in the accident, you will be paid the agreed-upon amount minus your comprehensive or collision deductible that you selected when you purchased your car insurance coverage. If you were not at fault in the accident, the insurance company representing the at-fault driver will pay you the total agreed-upon amount.

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Your Options After a Total Loss

If you agree with the insurer's proposal for an actual cash value settlement, you will be asked to sign the vehicle's title to transfer ownership to the insurer and send it to the claim adjuster before payment can be released to you.

You may disagree with the settlement that the insurer is proposing. If this happens and you and the claim adjuster cannot agree on an acceptable amount for both of you, you can keep the vehicle and accept a lesser amount from the insurance carrier. The amount is less than the actual cash value because the insurance carrier has to deduct the money that they would be able to recover by selling the car as a salvaged vehicle. When this happens, you will still need to send the title to the carrier, but you will not sign it; therefore, you retain the car's ownership. When the claim adjuster receives the vehicle title, the title will be stamped "salvage" and returned to you with the claim payment. You will then have the option to use the money you have been paid to try to get the vehicle fixed, or you can try to sell the vehicle on your own.

When a vehicle's title is stamped "salvage," the car is considered worth very little, even if its damages are repaired after the claim. This can make it difficult to obtain comprehensive coverage or collision coverage on the vehicle again and make it hard to sell to someone else because it isn't worth as much as a vehicle, just like that is not a salvaged vehicle.

Do I still have to pay a loan for a totaled car?

If your car is totaled and you still owe money on it through a finance or leasing company, the loan balance must be paid back to the bank. This is why it is important to buy gap insurance on a vehicle when you first buy it if you owe money on it. You can usually purchase gap insurance from the bank or your auto policy. Gap insurance will pay the difference between what the insurance company says the car is worth and what is still owed on the loan if the car is worth less than the remaining balance on your loan at the time of the claim. If you do not have gap insurance, the insurance carrier will pay the financing or leasing company the actual cash value of the car, and you will be held responsible for paying the rest of what is owed to the bank out of your own pocket.

Total Loss FAQs

Q: What is a total loss vehicle?

A. A total loss vehicle is a car that has been damaged in a loss and is determined by the auto insurance carrier to be worth less than the cost of repairing it.

Q: Can I decide how much my totaled vehicle is worth?

A. No. The auto insurance carrier will determine the car's actual cash value using various tools. If you disagree with the value, you can try negotiating with the claim adjuster, but you may not successfully convince them to pay you more for the car.

Q: Can I keep my totaled vehicle?

A. Yes. If you decide that the insurance carrier is not offering enough for the vehicle, you can decide to keep it and accept a claim payment from the insurance carrier that is the actual cash value minus the amount of money that the carrier could make by selling the damaged vehicle at salvage.

Q: Do I have to pay off the loan on my car if it is totaled?

A. If your car is totaled and you owe more on the car than it was worth at the time of the accident, you will have to pay the difference between the actual cash value and what you still owe to the bank unless you have purchased gap insurance.

Who Doesn't Need Gap Insurance?

Keep an eye on the value of our vehicle. Sites like Kelley Blue Book can be used to determine the actual cash value of your car. If the value of your car is more than what you owe on the loan or lease balance, you can safely remove the gap insurance from your auto insurance policy to avoid the additional premium you are paying for the gap insurance.

Also, if your auto insurance policy offers “new car replacement” coverage or “agreed value” coverage, you do not need to carry gap insurance. These coverages guarantee that you will be paid to replace your vehicle (new car replacement) with one of the same year, make, and model of your totaled vehicle or pay you a value that was determined for the vehicle when you purchased it (agreed value). Agreed value coverage will pay either the cost to repair the vehicle, even if it exceeds the actual cash value, or the agreed-upon value, regardless of depreciation.