Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Sep 26, 2020

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Key takeaways...

  • If your car is damaged in an accident, you may file a claim with your auto insurance company to recover the damages
  • The car insurance company will declare your vehicle a total loss if the damage is so extensive that the cost to repair it starts to approach the total value of the vehicle
  • When you accept a payout from the auto insurance company for your vehicle being declared a total loss, then the car insurance company has the legal right to take your car because you no longer own the vehicle
  • After the insurance company takes possession of a vehicle that it has declared a total loss, the insurance company is free to sell the vehicle to be able to recover some of its costs
  • Keep in mind that it is possible that you could still owe money on your car after it is totaled and you receive a payout from the insurance company

The car insurance company does not repossess cars the way that a lender would. The way that the car insurance company would be able to take your car from you is if you settle a claim for damage to your car with the insurance company and have it declared a total loss.

If your car is involved in an accident with major damage, this is a possibility.

To be able to get the check for the settlement of your claim from the insurance company, they will require you to hand over your car.

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Having Your Car Declared a Total Loss


The car insurance company makes a determination of whether your car is a total loss based on the fair market value of your car and the estimated cost of repairing your car.

The insurance company will not pay for repairs to your car that exceed the overall value of the vehicle. In this case, the car would be determined to be a total loss.

When your car insurance company issues you a check for the fair market value of your car, one of the conditions of you receiving the payment is that the insurance company will be the new owner of your vehicle.

It is very unlikely that the insurance company would ever let you keep your vehicle after it has been declared a total loss.

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If You Still Owe Money on Your Car

You may find yourself in the unfortunate situation where you still owe money on a totaled car loan even after you have received a settlement check.

The bad news is that the car insurance company is not responsible for paying the difference between the settlement amount you receive and what you have left to pay on your car loan.

The good news is that you can avoid this situation by adding gap insurance to your auto policy. The way that gap insurance works is that you are covered for any difference between the value of your car and what you have left to pay on your loan.

If you are at the beginning of a vehicle loan, then gap insurance can be very helpful in terms of preventing you from having to pay out of your own pocket.

When you are looking into car insurance quotes, you should check to see how much your premium would increase by adding gap insurance to your policy. In many cases, you will not have to pay much more at all for this extra layer of protection on your vehicle loan.

What if you don’t want your car to be totaled?


If you do not agree that the insurance company should have declared your car a total loss, you need to be prepared with evidence to support your position. This could include estimates that you have obtained on your own for the cost to repair your car.

You should submit these to your auto insurer to consider in taking another look at your claim.

If you still believe that your claim has not been resolved for a reasonable amount, then you should look into other ways to recover from your auto insurance company. This could involve filing a suit to recover, but you will need to move very quickly to accomplish this.

Your auto insurance provider may refuse to insure your damaged car in the meantime because they will argue that it will be a hazard for you to drive on the road.

Be sure that you are ready with another option for car insurance lined up because you do not want to have to pay a fine for being caught driving without the required auto insurance coverage.

If Your Car is A Total Loss

The scenario in which the car insurance company may have the right to take your car is if it is declared a total loss after you have filed a claim to recover your damages.

By declaring it a total loss, the insurance company has decided that it will not be repaired and is not safe for you to drive.

You will be required to turn over possession and ownership of the car to the auto insurance company in exchange for receiving a settlement check for your claim.

Make sure you have the right insurance coverage for your situation. Enter your zip code below to begin comparing top insurance companies.