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: Mar 12, 2022

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Key Takeaways

  • A totaled vehicle is no longer driveable
  • You can fix a totaled car, but you can’t legally drive it without a rebuilt title
  • Add GAP insurance to your policy to cover the balance of a financed car

Were you wondering what is considered a totaled car after getting into an accident? You won’t know if your car is totaled until a claims adjuster inspects your vehicle’s damage.

But you may have guessed that your car is totaled, especially if you can’t drive it home. So what do you do when a brand new car is totaled? Don’t worry — we’re here to help.

Our guide explains everything you need to know about totaled cars and what insurance coverages you need. Continue reading to discover totaled car meaning.

What does it mean when a car is totaled?

A totaled car indicates that your vehicle has damage costs that exceed the car’s value following an accident.

For example, a 2005 Ford Explorer is valued between $633 and $5,126 (value is based on the vehicle’s condition). If the repair cost to your ’05 Ford Explorer exceeds $4,100, the car insurance company will deem it a total loss.

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How do insurance companies determine a car’s value?

Car insurance companies send out a claims adjuster to examine your vehicle’s age, condition, mileage, and fair market value.

Insurance companies may also use the state’s total loss formula (TLF). The TLF is the state-mandated percentage of expenses compared to the salvage value.

Once the cost reaches a specific percentage limit (threshold), the insurance company determines whether a car is repairable or a total loss.

For example, if the repair cost is $7,200, but the salvage value is $6,900 after an accident, the car is considered a total loss because the expenses to fix the car exceed 95%. But thresholds vary for each state.

Let’s examine the total loss limits for each state.

Car Total Loss Threshold
StatesPercentage of Fair Market Value
New Hampshire75%
New JerseyTLF
New MexicoTLF
New York75%
North Carolina75%
North Dakota75%
Rhode IslandTLF
South Carolina75%
South DakotaTLF
West Virginia75%
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Most states have thresholds between 60% and 80%. Colorado is the only state that has a threshold of 100%.

States marked TLF use the standard fair market value total loss formula system. This indicates that a car is considered a total loss if the cost of repairs is 80% or above the fair market value, but the insurance company will pay for repairs if expenses are 60% or below.

Why shouldn’t you use totaled car value calculators?

Totaled car calculators aren’t the same as the calculators utilized by insurance companies. Each car insurance company uses different figures.

What happens after your car is totaled in an accident?

After your vehicle is totaled, you must do three things before you can receive a payout from your insurance company. These items should be included on your to-do list after a total loss accident:

  • Contact a claims agent. Have your name, address, driver’s license, and policy number ready when you call to file a claim.
  • The insurance company determines the car’s value. Your insurance company will send out a claims adjuster to determine how much the car is worth.
  • Pay your deductible to receive a claim check. Before a claim is paid to you, you’ll need to pay your deductible, or you can pay your deductible through the claim check.

But did you know there were more options? Some drivers keep their totaled vehicles.

You still have to pay the deductible when you’re at fault in a car accident, but you can keep the vehicle instead of receiving a claim check. The insurance company will calculate the actual cash value (ACV), taxes, and other fees and then subtract the salvage value from the insurance payout.

You’ll receive the difference from the insurance company, and the vehicle can be towed to any location you prefer. However, the insurance company may report your salvage title to your local Department of Motor Vehicles (DMV).

Can you fix a totaled car?

Yes, you can. If you decide to fix your totaled vehicle, you’ll need to have it inspected. Once your local DMV approves the repairs, you’ll need to obtain a rebuilt title.

Car insurance companies won’t acknowledge your insurance policy request until you have a rebuilt title. Also, you’ll only qualify for liability car insurance quotes. Most insurance companies won’t provide full coverage for a vehicle with a rebuilt title.

Who gets the insurance check when a car is totaled?

It depends on who’s at fault and what insurance coverages you have on your policy. If your car is totaled, but you’re not at fault, the at-fault driver’s liability insurance must cut you a check for the value of the car minus the salvage value.

If you’re at fault in an accident, you’ll need collision insurance to cover the cost of your totaled car. In situations that don’t involve a collision, you’ll need comprehensive coverage to pay for your totaled vehicle.

What if your brand new car was totaled, and you’re not at fault? The same principle applies even if the vehicle is used — the at-fault driver’s insurance policy will cover it.

Why should you get GAP insurance?

A car insurance company may give your lender a payout to cover the remaining balance on your loan.

But you should check your GAP insurance limits to ensure that you have enough to cover your loan’s total balance. If you don’t have GAP insurance, it’ll be your responsibility to pay off the loan.

Is a vehicle a total loss if the airbags deploy?

It depends on the damage cost. If the airbag replacement costs more than what the car is worth, the insurance company may consider it a total loss.

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What if your car is worth more than the insurance check?

If the value of your vehicle is worth more than the insurance company’s total loss payout, don’t cash or deposit the check. Call your claims adjuster and inform them that the funds are too low.

Show the claims agent the Kelley Blue Book value of your car in addition to the fair market value. Sometimes it’s necessary to contact an attorney if an insurance company insists on a lower claim amount.

Your Totaled Car: The Bottom Line

If the damage costs more than what the vehicle is worth, your car is a total loss. One of the significant obstacles is the loan amount.

The price tag at some dealerships inflates the car’s value, which raises many questions when the insurance company provides you a claim check that doesn’t match the amount that you owe.

But GAP insurance can provide coverage for complicated situations when you need to cover what’s left on your loan. Contact your insurance company if you want to add it to your policy.