Having your car declared a total loss is stressful, but understanding how insurance handles it can help. A car is “totaled” when the cost to repair it exceeds a certain percentage of its value, or when it simply can’t be safely repaired. The good news: if you have the right coverage, your insurer will pay you the car’s actual cash value so you can move on.
Jerry has helped 126,768 drivers get car insurance in the last year, including drivers who have totaled their car. Here’s what you need to know about getting fairly compensated when your car is totaled.
Jerry pulls up to 20 quotes from top rated carriers.
What insurance covers a totaled car?
The coverage that applies depends on what caused the damage and whether you were at fault.
Key takeaway: If you’re financing or leasing, make sure you have full coverage, which combines liability insurance with collision and comprehensive coverage. A liability-only policy won’t pay for your totaled car.
How do insurance companies decide if a car is totaled?
Insurance companies compare the cost of repairs to your car’s actual cash value (ACV). If repairs exceed a certain threshold, they’ll declare it a total loss and pay you the ACV instead of fixing it.
The threshold varies by state and can be determined in two ways.
Percentage threshold
About half of states use a fixed percentage, typically 70-80% of the car’s value. If repairs exceed that percentage, the car is considered totaled.
🚗 Scenario:
You crash your car, and the repair estimate is $11,500, which is 77% of your car’s value of $15,000. You live in a state which uses a 70% threshold to consider a car totaled.
| Car’s market value | $15,000 |
| Repair estimate | $11,500 |
| Repair estimate ÷ car’s market value = | 77% |
| Your deductible | $1,000 |
| Your insurance pays | $14,000 |
The repair estimates are higher than the 70% threshold, so your car is considered a total loss. You had full coverage on your policy, so after you pay your $1,000 deductible, your insurer pays you $14,000, your car’s market value at the time of the crash.
Total loss formula
The other half of states compare the combination of repair costs plus your wrecked car’s salvage value to your car’s ACV. If the total of repair costs plus the salvage value equal or exceed ACV, it’s considered totaled.
🚗 Scenario:
You crash your car, and the repair estimate is $13,000. You live in a state that uses the total loss formula, which compares repair costs plus salvage value to your car’s actual cash value.
| Car’s market value | $15,000 |
| Repair estimate | $13,000 |
| Salvage value (what the wrecked car is worth) | $2,500 |
| Repair estimate + salvage value = | $15,500 |
| Your deductible | $1,000 |
| Your insurance pays | $14,000 |
The combined total of $15,500 exceeds your car’s market value of $15,000, so your car is considered a total loss. You had full coverage on your policy, so after you pay your $1,000 deductible, your insurer pays you $15,000, your car’s market value at the time of the crash.
How much will insurance pay for a totaled car?
Insurance pays for your car’s actual cash value (ACV). ACV is what your car was worth immediately before the accident, not what you paid for it.
Factors that affect your payout include:
🚗 Year, make, and model. Some vehicles hold their value better than others, like the Honda Civic and Jeep Wrangler.
📍 Mileage. Higher mileage generally means lower value.
🔧 Condition before the accident. Maintenance records and pre-existing damage matter.
📋 Local market prices. Your insurer looks at what similar vehicles are selling for in your area.
💵 Optional equipment and upgrades. Aftermarket modifications may or may not be covered.
Jerry recommends: Always ask your insurer for a copy of their valuation report. It shows exactly which comparable vehicles they used to determine your totaled car’s worth, and you have the right to challenge it if it seems too low.
Protect yourself before a total loss with Jerry
The best time to think about being covered for a potential total loss is before you need the coverage. Comparing quotes helps you find the right coverage at a price that works for your budget.
Jerry partners with over 50 insurance carriers and shows you quotes side-by-side, fast. You can adjust your coverage levels and deductibles to see exactly how each choice affects your premium, and make sure you’re protected if the worst happens.
Can you negotiate a total loss settlement?
Yes. Insurance companies aren’t always right about your car’s value, and their initial offer is often negotiable.
To negotiate effectively:
🔍 Research your car’s value independently using Kelley Blue Book, Edmunds or NADA Guides.
📄 Gather documentation: Maintenance records, recent repairs, low mileage, or upgrades.
🚗 Find comparable listings in your area showing similar vehicles selling for more.
📝 Request the insurer’s valuation report and challenge specific cars used as comparison that aren’t equivalent to your wreck car.
⚖️ Consider hiring an independent appraiser if the gap in what you think your car is worth is significant.
Key takeaway: Negotiating with your insurer can often get you an additional $1,000 or more. Don’t accept the first offer without doing your research.
What happens to a totaled car?
Once your insurer declares your car a total loss, you have a few options:
Surrender the car
The most common option. You sign over the title, the insurer pays you the ACV minus your deductible, and they sell the car at a salvage auction.
Keep the car
In most states, you can buy back your totaled car at its salvage value. The insurer deducts the salvage value from your payout, and you keep the car to repair or sell for parts. The car will receive a salvage title.
Why it matters: If you keep a totaled car, it must be repaired and inspected before it can be legally driven again. Even with a rebuilt title, it may be harder, and more expensive, to insure.
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faq
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🚗 How long does a total loss claim take?
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💵 Will my insurance go up after a total loss?
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📉 Why is my payout less than I paid for the car?
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🛡️ What if I don’t have collision or comprehensive coverage?
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🔧 Can I dispute whether my car should be totaled?
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📋 Who gets the payout if I’m financing?
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📄 What happens if you owe more than your car is worth?
Methodology
Data included in this analysis comes from policies that Jerry has quoted within the last 6 months for drivers with a clean record and that have full coverage, unless stated otherwise. Data related to violations, accidents or credit scores pull from quote data from the last 18 months. Jerry services 48 states and offers a range of insurance companies to choose from.
Ben Moore is a writer and editor at Jerry and an auto insurance expert. He previously worked as a writer, editor and content strategist on NerdWallet’s auto insurance team for five years. His work has been published in The Associated Press, Washington Post, Chicago Sun-Times, MarketWatch, Nasdaq and Yahoo News. He also served as a NerdWallet spokesperson, with appearances on local broadcast television and quotes in Martha Stewart and Real Simple magazine.
Ben has an extensive background in digital marketing, working on affiliate and programmatic advertising campaigns for brands like Cabela’s, H&R Block and Sears. He holds a bachelors degree in marketing from Olivet Nazarene University.
