When is a car considered totaled?
Last updated: January 1
A car is generally considered totaled when the cost to repair the car exceeds the value of the car. 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 percent 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.
In other cases, the insurer determines whether a vehicle is considered a total loss.
Comprehensive coverage and collision coverage help pay to replace a totaled vehicle. These two separate coverages are typically required on your car insurance policy if you're leasing or financing your vehicle. If your car is paid off, they're optional. But, if your vehicle is totaled and you don't have comprehensive or collision coverage, you may have to pay out of pocket to buy a replacement vehicle.
What happens if my car is totaled in an accident?
If you're involved in a car accident, there are a few basic steps to follow before and after your vehicle is considered totaled:
How is my car's value decided?
To determine your car's worth (the "actual cash value" in insurance terms) at the time of the accident, insurers typically use a number of factors to figure your car's actual cash value, including its age, condition, mileage and resale value, in addition to the selling price of similar vehicles in your area.
Do I still have to pay a loan on a totaled car?
If you're financing a car that's been totaled, your insurance company will likely make the claim check payable to both you and your lender, which means you'll have to come to an agreement with your lender on how to release that money, the Insurance Information Institute (III) says. Typically, the lender will be reimbursed first, with any remaining money then being paid to you.
It's possible that you may still owe your lender more for the car than the insurance payment you receive. In that case, you are responsible for paying the remaining balance on the car lease or loan. For instance, suppose you owe $15,000 on your car loan, but your vehicle's value has depreciated to $13,000 when it's totaled. If you have collision coverage, your insurer would reimburse you for the actual cash value of your car — in this case, $13,000. You would have to pay your lender that amount, plus the remaining $2,000 out of your own pocket.
Adding loan or lease gap coverage to your car insurance policy is one way to help protect against paying a lender out of pocket for a totaled vehicle. Depending on your insurer, this optional coverage may be available as part of a package or as a standalone coverage. It may also be available only for brand-new cars
What if the total loss wasn't my fault?
In some cases, a totaled car may not be anyone's fault. Suppose, for instance, that a tree topples onto your parked car and your insurer declares it's totaled. If you have comprehensive coverage on your car insurance policy, it will likely reimburse you for the actual cash value of your vehicle (again, minus your deductible).
If your car is totaled in an accident that is caused by another driver, your collision coverage may first come into play. However, your insurer may seek repayment from the other driver's insurer to cover the loss. In some cases, that may mean you are also reimbursed for the deductible that was subtracted from your insurance payout.
My car's airbags deployed — is it a total loss?
If your vehicle's airbags deploy in a car accident, that does not necessarily mean your car is a total loss. Your insurance adjuster will assess the situation and determine if the cost of replacing the airbags and repairing your vehicle would exceed its actual cash value. If the cost of repairs is less than the value of your car, your vehicle will likely not be declared a total loss.