How Much Will Insurance Pay for My Totaled Car? (Full Guide)

If your insurance company decides to total your car, it’ll generally pay you the fair market value of your car — also called actual cash value (ACV) — from just before the car accident.1 This won’t necessarily cover what you paid for the car, the cost to get a new car, or the remaining balance on your auto loan.

Filing insurance claims can be stressful, especially for a totaled car. Even figuring out whether your car qualifies as totaled can be unclear.

Learn more about how much insurance will pay for your totaled car by reading our full guide or watching the short video below.

What is a totaled car?

A car is a total loss (totaled) when you file a claim for it and your insurer determines that repairs would cost more than the car’s value.2

What can total your vehicle?

Both collision and non-collision events can cause enough damage to total your car. For example, the following incidents can total your vehicle:

• Collision

• Flash flooding

• Hailstorm

The lower the car’s value, the easier it is for damage to result in your insurer totaling your vehicle.

For example, if your car needs $5,000 of repair work, an insurer will pay that if your car is worth $40,000. But if your car’s value is only $4,000, a $5,000 repair is more than the car’s value, and the insurer may total it.

Additionally, most states set a minimum threshold for insurers to consider costs repairable or totaled.3 For example, in Oklahoma, repair costs totaling 60% or more of your car’s cash value would result in your insurer totaling the car.4

How the total loss formula works

The total loss formula is a method insurance companies use to determine if a vehicle qualifies as not worth fixing, or a total loss. Using the total loss formula requires some calculation with the following factors:

• Fair market value (FMV): Your car’s fair market value prior to the damage

• Repairs value (RV): Cost of repairs to completely fix your car

• Salvage value (SV): Your car’s value as a salvage vehicle sold to a scrapyard

Here’s the total loss formula:

• If the repairs value is greater than or equal to the fair market value minus the salvage value, the insurer will declare the car a total loss.5

In other words, if it costs more to fix your car than to pay out what your car was worth (minus any proceeds it can get from selling your car to a scrapyard), your insurer will likely pay you the value. It’ll declare your car a total loss, sell it for parts, and pay you what it was worth rather than paying to fix it up.

How much will my insurance pay for my totaled car?

If the auto insurance company declares your car is a total loss, it’ll pay you the car’s fair market value — also known as its actual cash value (ACV) — minus any deductible. In other words, the payout amount for your totaled car is what you would’ve been able to earn if you’d sold it prior to the damage.

For example, if your car’s fair market value was $25,000 just before it incurred damage, that’s how much the insurance company would pay you if it totals your car. If you have a deductible, other insurance fees, or a loan balance on the car, these expenses will come out of that fair market value determined before you get your payout.

The graphic below shows an example of how much your insurance company would pay in the event of a totaled car.

How to calculate the fair market value of a car

The fair market value of a car is the price it would sell for in an open market.

To estimate a possible insurance payout from your totaled car, you can easily calculate your car’s fair market value with tools like Kelley Blue Book (KBB) or Edmunds. These sites aggregate data from real-world used-car sales to help users determine their car’s market value.

Fair market value also accounts for factors like car age, mileage, and condition — just like any savvy car shopper would when making a purchase decision. However, fair market value isn’t: 

• How much you paid for the car

• How much money you have left on your loan if you financed your car

• How much it’ll cost you to buy a new, similar car

A lower fair market value can leave people who financed their vehicles in tough financial spots after an accident. If the fair market value you receive through the claims process doesn’t cover what you owe on the car, you’ll still need to pay the remaining loan balance on a car you no longer own — unless you have gap insurance.

What insurance covers a totaled car?

Your insurance company’s ability to cover the costs of your totaled vehicle will depend on the type of coverage you have and the circumstances of the car accident. For example, if you have only liability coverage, your insurance company won’t cover your totaled vehicle.

If you total your vehicle, the following four coverage types can potentially pay for a totaled car:

How does gap insurance work if you total your car?

Guaranteed asset protection (gap) insurance pays the difference between your remaining car loan balance and what your car insurance policy pays if you total your car.

For example, let’s say you still owe $25,000 on a car with an ACV of $15,000 and have a $1,000 deductible. Your insurance company will only offer $14,000 after you pay your deductible, leaving you with a remaining loan balance of $11,000 for a car you no longer own.

If you have gap insurance, your insurer will pay the outstanding $11,000 left on your loan minus your deductible.

Do you still have to pay insurance if you total your car?

If you total your car, deciding whether to maintain insurance coverage depends on how soon you plan to get a new vehicle and how long you’ve had your current policy. Many insurance companies offer insurance discounts to loyal customers — and you can lose that discount by canceling your policy, even if you plan to return not long after.

If you plan to get a replacement car relatively quickly, you should continue paying for insurance so you don’t lose your loyalty status or risk a gap in insurance coverage.

How to file a claim for a totaled car

Knowing what to do after totaling your car may feel stressful, but the process is fairly straightforward. You need to file a claim with your insurance company after incurring damage in an accident to determine whether to total the car or if it qualifies for repairs.

Here’s how the claims process generally works:

1. File a claim with the auto insurance company. After an accident, file a claim with your insurance company or the other driver’s insurance company, depending on who’s at fault and if you have collision or comprehensive coverage.

2. The insurer estimates the repair costs. The insurance company will send an insurance adjuster to inspect your car and calculate an estimate for auto body repair costs.

3. The insurer decides whether to total your car. The insurance company compares the cost of the repairs against your car’s pre-damage value. If repair costs meet a certain threshold, it’ll declare your car a total loss.

4. The insurer offers a cash settlement. If the insurer declares your car totaled, it’ll offer you a cash payout. You can review this settlement and decide whether it’s fair — and if not, you have options to negotiate.6

Can you fight a total loss settlement?

If the insurance company declares your car totaled and offers you a total loss settlement, it’s important to know that this isn’t a take-it-or-leave-it situation. If you don’t agree with the offer, you’re free to negotiate a counteroffer.

Your chances of success may increase if you follow a few strategies:

• Review your policy. Your policy, which is essentially a contract, will spell out any rights you do or don’t have for contesting any claims.

• Gather evidence. If you invested money in your car, like recently buying new tires or expensive sound equipment, get the receipts to back you up and estimate your car’s value using tools like Edmunds or KBB.

• Get an independent appraisal. Another appraiser may be able to offer a higher estimate, particularly if you can show receipts for work you’ve done to your car.

• Contact your state’s insurance commissioner. Every state has an office for consumer insurance, and it may be able to advise you on your state-specific rights.

• Hire an attorney. If all else fails, an attorney may be able to help you get your car’s full value back.7

Following these steps can make the total loss settlement process lean more in your favor and could even lead to a bigger insurance payout in the event of a totaled car.

Totaled car FAQs