The average cost to repair a vehicle is around $500–$600, but it can cost much more in some cases, according to AAA.1 If you have a serious accident that totals your car, it doesn’t make financial sense to repair it.
Here’s what you need to know about totaled vehicles, including when a car qualifies as totaled and what you should do with it.
Your car insurance company will total your vehicle if the cost of repairing your car exceeds its actual cash value (ACV), or fair market value. These interchangeable terms describe how much your car was worth at the time of the crash before the damage occurred. If the vehicle is unsafe to drive even after receiving some repairs, your insurer can total it.
Driving safely can help you reduce the risk of totaling your vehicle, but factors outside of your control — such as dangerous drivers or extreme weather conditions — can total your vehicle.
If your insurance company declares your car as totaled and you have the proper coverage, you should receive a payout for what your insurance company deems the car is worth, minus your deductible. For example: Let’s say your car is worth $6,000, and you have a $500 deductible. In this scenario, you can expect a $5,500 payout.
Your insurance company may use the total loss formula when determining if your vehicle is a total loss, though some states require companies to implement total loss percentage thresholds for a vehicle’s ACV instead.
Total loss threshold: States that have a total loss threshold requirement often have an ACV percentage threshold of 70%–80%, but specifics vary by state. An insurer will deem a vehicle a total loss when the cost to repair it exceeds the set percentage threshold of its ACV.
Total loss formula: In states that don’t have a set percentage threshold, car insurance companies use the total loss formula. If the necessary repair costs exceed your vehicle’s ACV minus the car’s salvage value, then the insurer will deem your car a total loss.2
The fair market value of the car is what the vehicle would be worth at car dealerships or private sales between a willing buyer and seller. To find the fair market value of your car, you can use an authoritative resource in the automotive industry, such as Edmunds, Kelley Blue Book (KBB), or the National Automobile Dealers Association Used Car Guide.
You’ll need to enter the most current information about your vehicle — such as its year, make, model, mileage, and overall condition — to receive the most accurate market value information for your vehicle.
States have different thresholds for declaring vehicles a total loss — which can be a percentage of loss or the total loss formula (TLF). But car insurance companies can choose a lower threshold as long as they meet the state’s minimum.
Here are the threshold requirements by state.
If you have a major car accident, do your best to remain calm and follow these steps after making sure everyone involved is safe.
File an insurance claim. First, file a claim with your car insurance company. You may contact your car insurance agent or report the claim online. You’ll need to include the police report, explain what happened, and attach any photos or videos you captured of the damage. If applicable, you should collect the names and contact information of witnesses at the scene of the accident so you can provide them as well.
Work with a claims adjuster. An insurance adjuster will likely come out to inspect your car in person. The inspection will inform them of the condition of your vehicle and help the auto insurance company estimate your potential claim payout. The company may have your car towed to a storage facility so that the adjuster can complete their work there.
Collect your insurance payout. If the adjuster deems your vehicle a total loss, your insurer will let you know. You can expect a settlement check, minus your deductible. Note that if you have a lease or loan on your car, the car insurance company will pay the leasing company or lender the amount you still owe them if you have gap insurance.
Several types of optional car insurance add-ons can provide an insurance settlement for a totaled car. Learn more about these common coverages below.
Here’s some information to help answer your remaining questions about totaled vehicles.
The salvage value of a vehicle will depend on your state as well as the year, make, and model of your car. While the amount varies by car insurance company, it’s typically about 75% of the market value.3
It depends. You may have the option to repair or keep a totaled car. But you’ll likely need to get a salvage title if you have someone repair your vehicle.
If your totaled vehicle is still drivable, you’ll have to meet your insurance company’s requirements to keep driving it. You may need a rebuilt title in some cases, and you should get it checked by a mechanic at a repair shop to make sure it’s safe to drive.
The Texas Department of Insurance states that a car is a total loss when the cost to repair it and the salvage value is at least 100% of its ACV. Car insurance companies in the state may use a lower percentage threshold.4
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