Generally speaking, a car is considered totaled when significant damage makes safe repairs impossible or the cost to repair the car comes close to or exceeds the value of the car. Depending on your insurance coverage, your auto insurer may reimburse you for the current market value of your car.

Real world example: After an accident, a claims adjuster investigates the driver’s insurance claim and determines the claim should be covered and the vehicle costs $11,000 to repair. However, in fair condition, the car is only worth $10,000. In this scenario, the insurer would likely consider the car a total loss (totaled) because it doesn’t make financial sense to pay more for repairs than the car’s pre-accident value.

How states define totaled cars differently

Some states have laws that define a totaled vehicle by specific thresholds. In Alabama, for instance, a car may be totaled when the damage is greater than 75% of its value. In that case, if a vehicle is worth $5,000 and the repair estimate is $4,000, the vehicle would likely be considered totaled. Other states may have different percentages, and in some instances, insurers may set their own thresholds.