No one plans on totaling their car. But accidents, storms, and other unexpected events can leave your vehicle so damaged that it’s declared a “total loss” by your insurance company. If this happens, it’s normal to feel overwhelmed. What happens next? How much will insurance pay? Can you keep your car? And what if you still owe money on it?
At Crain Insurance Group, we want you to feel empowered, not stressed, during the claims process. In this blog, we’ll explain what it really means when your car is totaled, walk through the steps that follow, and help you understand your rights and options every step of the way.
What Does It Mean When a Car Is “Totaled”?
A car is considered “totaled” when the cost to repair it exceeds a certain percentage of the car’s actual cash value (ACV), usually between 70% and 80%, depending on your insurance carrier and your state’s laws.
For example:
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Your car’s ACV is $10,000
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Repairs are estimated at $8,000
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If the insurer uses an 80% threshold, the car will be declared a total loss
In some cases, a vehicle may also be totaled if the damage affects critical components like the frame or airbags, even if the cost to repair is slightly below the threshold.
Common Reasons a Car Might Be Totaled
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Severe collision damage
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Major weather-related damage (hail, floods, hurricanes)
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Vehicle fire or theft recovery with substantial damage
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Airbag deployment in older or lower-value vehicles
What Happens Immediately After a Total Loss?
Once your car is declared totaled, your insurance company will start the total loss claims process. Here’s what you can expect:
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Damage Assessment
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An adjuster reviews repair estimates and your vehicle’s condition to determine whether it qualifies as a total loss.
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Valuation
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The adjuster will calculate your car’s actual cash value (ACV), what it was worth right before the accident. This includes factors like:
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Make, model, and year
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Mileage
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Overall condition
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Local market comparisons
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Settlement Offer
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You’ll receive a settlement amount based on the ACV, minus your deductible and any applicable fees.
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Loan Payoff (if you have a car loan)
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If you owe money on your car, the insurance company will pay your lienholder (bank or lender) directly. If the payoff amount is more than the settlement, you may still owe the balance—unless you have gap coverage.
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Title Transfer & Salvage
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You’ll typically need to sign over the vehicle title to the insurance company. The car is then sold for parts or scrap as a salvage vehicle.
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Payment Issued
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Once everything is finalized, the insurer will send a check or direct deposit for your portion of the payout.
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What If You Still Owe Money on a Totaled Car?
If your loan or lease balance is greater than the ACV, you’ll be responsible for the difference unless you have gap insurance.
Gap insurance bridges the gap between your insurance settlement and what you still owe on your loan. It’s especially useful in the early years of car ownership when the vehicle depreciates faster than the loan is paid off.
Example:
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Loan balance: $15,000
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Insurance payout: $11,000
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Gap insurance covers the remaining $4,000
If you don’t have gap coverage, you’ll be required to pay the $4,000 difference out of pocket.
Can You Keep Your Totaled Car?
In some cases, yes you may choose to retain the vehicle. This is called an “owner retention” or “buyback” option.
If you choose this:
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The insurance company will deduct the salvage value from your payout
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You’ll receive a salvage or rebuilt title, which could affect resale value and future insurability
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You may need to have the car repaired and pass a state inspection to legally drive it again
Some policyholders opt to keep their car if the damage is mostly cosmetic or they believe they can repair it affordably on their own.
How to Make Sure You’re Getting a Fair Settlement
Insurance companies use software and local market data to calculate a car’s ACV, but you’re not obligated to accept their first offer if you believe it’s low.
Here’s how to advocate for a fair payout:
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Research similar vehicles in your area (same year, make, model, mileage, and condition)
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Gather maintenance records and receipts for upgrades
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Request a detailed valuation report from your insurer
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Dispute the valuation with your own documentation if needed
If you still can’t reach an agreement, you can:
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Ask for a third-party appraisal
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Consider hiring a public adjuster (at your own cost)
What Should You Do After the Total Loss Settlement?
Once you receive your settlement, it’s time to make a few key decisions:
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Shop for a Replacement Vehicle
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Be sure your next vehicle matches your current coverage and budget.
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Update Your Insurance Policy
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Remove the totaled vehicle from your policy and insure your replacement vehicle. Don’t drive your new car off the lot without coverage in place!
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Review Your Coverage
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Now is a great time to consider:
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Adding gap coverage (if financing)
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Adjusting deductibles
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Ensuring you have rental reimbursement coverage for future claims
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Keep Copies of All Paperwork
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Save your settlement documents, title transfer records, and any communications with your insurer for future reference.
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Tips for a Smoother Total Loss Experience
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Stay organized. Keep all documents, emails, and claim numbers in one place.
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Be responsive. Timely replies to your adjuster can speed up the process.
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Ask questions. Don’t be afraid to request clarification or additional information.
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Contact your agent. At Crain Insurance Group, we can help interpret your coverage and assist you with the claims process.
Crain Insurance Group: Your Claims Advocate
At Crain Insurance Group, we’re not just here to sell policies, we’re here to stand by you when you need support the most. When a vehicle is totaled, we help our clients:
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Understand their policy and deductible
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File claims quickly and efficiently
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Review settlement offers for fairness
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Update their policy after replacing the vehicle
Our goal is to help you move forward with confidence, not confusion.
Final Thoughts: Know Your Rights, Know Your Coverage
Having your car totaled can be a stressful experience, but with the right knowledge and support, it doesn’t have to be overwhelming. By understanding the total loss process, your rights as a policyholder, and the role your insurance coverage plays, you can make smart, informed decisions about your next steps.
If you’ve recently been in an accident or want to review your auto insurance for better protection, give Crain Insurance Group a call.
We’re here to make sure you’re covered, every mile of the way.
Disclaimer: The information provided in this post is for general recommendation purposes only. Please consult with your own licensed insurance agent for advice specific to your situation. Insurance can vary by state. If you don’t have a trusted agent, we’re happy to assist with quotes and guidance.