How Much Damage Do You Need to Total a Car
No one likes to think about the possibility of crashing their car, but knowing what to do when it happens makes the aftermath much easier.
With a car crash happening, according to the National Highway Traffic Safety Administration, approximately every 60 seconds - or more than 5 million crashes per year - it's likely you or someone you know will be involved and one in your lifetime.
It's time to learn how to handle the situation where a crashed car turns into a total loss. Here's what you're likely to face if your car is totaled in a crash.
KEY TAKEAWAYS
- Your insurance company may decide your damaged car is totaled if repairs would cost more than the car is worth.
- The condition of the body, interior and tires, and other additional parts or equipment you've added will help the insurance company to determine the cost of your car.
- Usually, a damaged car is auctioned at a salvage yard, but you can keep it if permitted by state laws.
- Your car insurance rates will spike up if you are at fault in the accident.
When is a car considered totaled?
When exactly do insurance companies total a car?
Long story short: if the repairs are expected to cost more than the car's value, it will be totaled.
Your adjuster will make a note of your mileage, the condition of the body, interior and tires, and any additional parts or equipment you've added. Then, based on the pre-crash condition of your car, your adjuster will find similar models for sale in your area and establish the total loss estimate on these comparable cars. This is called the Actual Cash Value (ACV) of your car.
Your insurance company may decide your damaged car is a total loss if:
- It cannot be repaired safely
- Repairs would cost more than the car is worth, or
- State laws require the company to call it a total loss due to the amount of damage. This can vary from 50% of the car's pre-accident value in Iowa to 100% in Texas. This is often called a total loss threshold. Many states use a Total Loss Formula: the cost of repairs plus the car's scrap value must equal or exceed the car's pre-accident value.
Below you'll see total loss thresholds and Total Loss Formulas by state.
| State | Rule | Law | What you should know |
|---|---|---|---|
| ALABAMA | 75% | Ala. Stat. § 32-8-87(d) | Damage to vehicle is greater than 75% of fair retail value prior to damage. Vehicle is "salvage" when (1) frame or engine removed and not immediately replaced, or (2) when insurer has paid a total loss on vehicle. Insurer buys the vehicle from insured for the FMV of the salvage and then applies to the state for salvage title. |
| ALASKA | Total Loss Formula (TLF) | Duty of insurance company obtaining title to unrepairable vehicle. | Cost of repairing damage to the vehicle exceeds vehicle's worth or insured value. No statutory definition of "salvage vehicle." Vehicle is "wrecked vehicle" when so disabled that can't be used for primary function without substantial repair or reconstruction. Insurance company which "totals" vehicle must mark the word "junk" on the title and surrender the title to the state. This is true for either an "actual total loss" or a "constructive total loss." |
| Alaska Admin. Code tit. 2, § 92.170. | |||
| ARIZONA | Total Loss Formula (TLF) | A.R.S. § 28-2091(T)(4) | Insurer determines if it is uneconomical to repair vehicle. It then is a salvage vehicle. |
| ARKANSAS | 70% | A.C.A. § 27-14-2301(6)(B) | Damage to vehicle greater than 70% of fair retail value prior to damage or vehicle is water damaged. |
| CALIFORNIA | Total Loss Formula (TLF) | Martinez v. Enter. Rent-A-Car Co., 13 Cal. Rptr.3d 857 (Cal. App. 2004). | A vehicle is a total loss where the cost of repair exceeds the vehicle value prior to the repair of the vehicle. |
| Cal. Veh. Code § 544. | "Total Loss" means either of the following: | ||
| Cal. Veh. Code § 11515 | (a) A vehicle, other than a non-repairable vehicle, that has been damaged to the extent the insurance company considers it uneconomical to repair, and is not repaired; or | ||
| (b) A vehicle determined to be uneconomical to repair, for which a total loss payment has been made by an insurer, whether or not the vehicle is subsequently repaired, if prior to or upon making the payment, the insurer obtains the agreement of the claimant to the amount of the total loss settlement, and informs the client that, pursuant to subdivision (a) or (b) of § 11515, the total loss settlement must be reported to the DMV, which will issue a salvage certificate for the vehicle. | |||
| California defines a salvaged vehicle as one that has been either totally destroyed or damaged beyond what the insurance company is willing to pay to fix it, so the owner never gets the vehicle repaired. Depending on its condition, one of several things may happen to the car. | |||
| The first of these is that the title is exchanged for a Salvage Certificate issued by the DMV. | |||
| COLORADO | 100% | C.R.S. § 42-6-102 (17)(C) | Cost of repairing vehicle exceeds retail fair market value. Retail value is determined by sources accepted by the insurance industry, which is usually when cost of repair exceeds market value. |
| CONNECTICUT | Total Loss Formula (TLF) | C.G.S.A. § 38a-353 | Insurer must use NADA average and one additional approved source and constructive total loss is when cost to repair or salvage damage equals or exceeds the total value. Once declared "total loss" by insurer it is a "salvage vehicle." |
| DELAWARE | Total Loss Formula (TLF) | 21 Del. C. § 2512 | Insurer determines if vehicle is a total loss. It is then transferred as "salvage vehicle." |
| DISTRICT OF COLUMBIA | 75% | D.C. Code § 50-1331.01(12)(A) | Damage to vehicle exceeds 75% of retail value prior to the damage. No salvage law in D.C. |
| FLORIDA | Total Loss in Florida involves when and under what circumstances a salvage title is required. "Salvage" means a motor vehicle or mobile home which is a total loss. A vehicle is a total loss when: | F.S.A. § 319.30(1)(t) | However, carrier can declare vehicle a total loss depending on whether they believe settling for total loss requires less money than cost of repair. It is a business decision. If insured and insurer agree to repair, rather than replace, vehicle is not total loss. However, if actual cost to repair exceeds 100% of replacement cost, vehicle must be branded "Total Loss Vehicle." Therefore, vehicle can be repaired up to 100% of ACV before branding of title is required by statute. The "80%" simply means that if the cost to repair a damaged vehicle is 80% of its value or more, then if the vehicle is declared a total loss by the insurance company, that the salvage title returned on the salvage will be a "Certificate of Destruction" in the insurer's name and not eligible to be rebuilt. |
| Insured Vehicle: When carrier pays the owner to replace the vehicle with one of like kind or when it makes payment upon theft of vehicle. | F.S.A. § 319.30(3)(a)(1)(a)(b) | Insurance company does not have to "total" a vehicle if the costs of the repairs exceed 80% of ACV. The statute doesn't require it, but most companies used it as a rule of thumb. | |
| Uninsured Vehicle: When the cost, at the time of loss, of repairing or rebuilding the vehicle is 80% or more of the cost of replacing the damaged motor vehicle with one of like kind. | |||
| GEORGIA | Total Loss Formula (TLF) | Ga. Code Ann. § 40-3-2 (11) | Vehicle is damaged to the extent that its restoration to an operable condition requires replacing two or more major component parts. |
| HAWAII | Total Loss Formula (TLF) | Haw. Rev. Stat. § 286-48 | Insurer determines if a vehicle is repairable or whether it is a total loss, and must have material damage to vehicle's frame, unitized structure, or suspension system, and cost of repairing damage exceeds market value. |
| IDAHO | Total Loss Formula (TLF) | Idaho Code § 49-123(2)(o) | Cost of parts and labor minus the salvage value makes it uneconomical to repair or rebuild. |
| ILLINOIS | Total Loss Formula (TLF) | 625 I.L.C.S. § 5/3-117.1(b) | Insurer determines when vehicle is salvage/total loss. Must not be from hail damage or a vehicle that is nine model years or older. Vehicle is "salvage" when insurer makes total loss payment. |
| INDIANA | 70% | I.C. § 9-22-3-3 | Cost to repair vehicle is greater than 70% of fair market value prior to damage or the insurer determines it is impractical to repair and makes total loss payment. |
| IOWA | 50% | I.C.A. § 321.52(4)(d) | Damage disclosure requirements kick in at 50%. If cost to repair vehicle is greater than 50% of ACV then the vehicle must have a damage disclosure on the title and it becomes "wrecked or salvage vehicle." |
| KANSAS | 75% | K.S.A. § 8-197(b)(2)(B) | Cost to repair vehicle is 75% more than the fair market value at the time immediately before it was wrecked. |
| KENTUCKY | 75% | K.R.S. § 186A.520(1)(a) | Cost of parts and labor to rebuild vehicle to pre-accident condition exceeds 75% as set forth in NADA price guide. |
| LOUISIANA | 75% | La. R.S. § 32:702(13) | Damage equivalent to 75% or more of the market value as determined by NADA. |
| MAINE | Total Loss Formula (TLF) | 29-A M.R.S. § 602(19) | Vehicle is "salvage" when insurer declares it a total loss or salvage title is issued. Owner transfers vehicle to insurer due to damage or owner determines it has no marketable value. |
| MARYLAND | 75% | Md. Code, Transportation | Cost to repair vehicle exceeds 75% of the fair market value. |
| § 11-152 (a)(1) | |||
| MASSACHUSETTS | Total Loss Formula (TLF) | M.G.L.A. 90D § 1 | Insurer determines if it is uneconomical to repair the vehicle and the vehicle is not repaired. |
| MICHIGAN | 75% | M.C.L.A. §257.217c(2)(b)(i) | If cost of repair, including parts and labor, is between 75% and 91% of the actual cash value, then a salvage title is given. It then is a "distressed vehicle." |
| MINNESOTA | 80% | M.S.A. § 168A.151(b)(c)(3) | Damage to late model vehicle (newer than six-years-old) or high value vehicle (over $5,000) exceeds 80% of its actual cash value. |
| MISSISSIPPI | Total Loss Formula (TLF) | M.C.A. § 63-21-33 | Vehicle cannot be more than ten-years-old, have a value of less than $1,500, or damage that requires replacement of five or few minor components. Also, applies to vehicle which requires replacement of more than five minor component parts according to insurer. |
| MISSOURI | 80% | Mo. Rev. Stat. § 301.010(51)(a) | Vehicle less than six-years-old and if damaged exceeds 80% of the fair market value. |
| MONTANA | Total Loss Formula (TLF) | Mont. Code Ann. § 61-3-211 | Insurer determines if the vehicle is a total loss. It is "salvage vehicle" if insurer decides it is uneconomical to repair, considering parts and labor. |
| NEBRASKA | 75% | Neb. Rev. Stat. § 60-171(6)(a) | Late model vehicle damage exceeds 75% of the retail value at the time it was wrecked, damaged, or destroyed. "Late model vehicle" means a vehicle which has (a) a manufacturer's model year designation of, or later than, the year in which the vehicle was wrecked, damaged, or destroyed, or any of the six preceding years. |
| NEVADA | 65% | N.R.S. § 487.790(1)(b) | Vehicle damage exceeds 65% of the fair market value. |
| NEW HAMPSHIRE | 75% | N.H. Rev. Stat. Ann. § 261:22(VI)(b) | Cost for vehicle repair is 75% or more of its fair market value prior to being damaged. |
| NEW JERSEY | Total Loss Formula (TLF) | N.J.S.A. § 13:21-22.3 | Insurer determines if it is "economically impractical" to repair vehicle or cost of repairs is higher than the market value of the vehicle. |
| NEW MEXICO | Total Loss Formula (TLF) | N.M.S.A. § 66-1-4.16(C) | Insurer determines if it is uneconomical to repair vehicle. |
| NEW YORK | 75% | 15 NYCRR § 20.20(c)(ii) | Cost for repair of vehicle made in 1973 or older is 75% or more of retail value prior to being damaged by a nationally recognized compilation of retail values. |
| NORTH CAROLINA | 75% | N.C.G.S.A. § 20-71.3(d) | Cost for vehicle repair is 75% or more of its fair market value prior to being damaged. Any vehicle totaled by insurance company must have title and registration card marked, "Total Loss Claim." |
| NORTH DAKOTA | 75% | N.D.C.C. § 39-05-20.2 | Vehicle damage exceeds 75% of retail value of vehicle determined by NADA. Glass and hail damage are excluded. |
| 11 N.C. Admin. Code 4.0418 | |||
| OHIO | Total Loss Formula (TLF) | Ohio Rev. Code Ann. § 4505.11(C)(1) | Insurer determines if it is economically impractical to repair vehicle. |
| OKLAHOMA | 60% | 47 Okla. Stat. Ann. § 1111(C)(1) | Cost to repair damage to vehicle exceeds 60% of fair market value. |
| OREGON | 80% | O.R.S. § 801.527(3) | Damage to vehicle is equal to or more than 80% of retail market value. |
| PENNSYLVANIA | Total Loss Formula (TLF) | 75 Pa. Cons. Stat. Ann. § 102 | Extent of repairs to vehicle would exceed the value of the repaired vehicle. Doesn't include antique or classic cars. |
| RHODE ISLAND | Total Loss Formula (TLF) | R.I.G.L. § 31-46-1.1 | Insurer decides if a vehicle is totaled, there are two classifications, A and B. A is the vehicle is good for parts only and B is the vehicle is repairable. |
| SOUTH CAROLINA | 75% | S.C. Code Ann. § 56-19-480(G) | Cost of repairing the vehicle exceeds 75% of the fair market value of the vehicle. |
| SOUTH DAKOTA | Total Loss Formula (TLF) | S.D.C.L. § 32-3-51.19 | Insurer or self-insurer determines a total loss. |
| TENNESSEE | 75% | T.C.A. § 55-3-211(9)(A) | Damage to vehicle equal to or more than 75% of retail market value as determined by current published retail costs. |
| TEXAS | 100% | Tex. Transp. Code § 501.091(15) | If total cost of repairs exceeds ACV of vehicle, then it is a salvage vehicle. |
| UTAH | Total Loss Formula (TLF) | U.C.A. § 41-1a-1005 | Insurer makes decision whether a vehicle is declared a non-repairable vehicle. Or, two or more major components suffer major damage. |
| VERMONT | Total Loss Formula (TLF) | Vt. Stat. Ann. Tit. 23, § 2001(14) | Insurer makes decision whether a vehicle (less than 10-years-old) is declared a total loss. |
| VIRGINIA | 75% | Va. Code Ann. § 46.2-1602.1 | Cost to repair late model vehicle exceeds 75% of ACV prior to vehicle being damaged, then vehicle is issued a non-repairable certificate or a salvage certificate. |
| WASHINGTON | Total Loss Formula (TLF) | R.C.W.A. § 46.04.514 | Insurer determines whether cost of parts and labor plus salvage value has made it uneconomical to repair and vehicle must be more than six-years-old. |
| WEST VIRGINIA | 75% | W. Va. St. § 17A-4-10(a) | Cost to repair vehicle is greater than 75% of market value determined by a nationally accepted used car value guide. |
| WISCONSIN | 70% | Wis. Stat. § 342.065(1)(c) | Damage exceeding 70% of fair market value will render vehicle less than seven model years old a salvage vehicle. This only applies "If the vehicle is less than 7-years-old, is damaged by collision or other occurrence to the extent that the estimated or actual cost, whichever is greater, of repairing the vehicle exceeds 30% of its fair market value and was transferred to an insurer upon payment of an insurance claim." |
| Wis. Stat. § 342.06(1)(hr) | |||
| WYOMING | 75% | Wyo. Stat. § 31-2-106(v) | For vehicle to be in pre-accident condition, labor to rebuild and parts exceed 75% of ACV of vehicle. |
What to do when your car is totaled?
What happens when insurance totals your car? There are options other than just accepting your insurance company's payout.
Salvage the car - Some states will allow you to keep the car and bring it to the junkyard yourself. Typically the cost that you will get from the salvage will be deducted from what the insurance company pays you.
Sell it to a junkyard - Most junkyards will buy salvaged cars for scrap metal. The upside is they will also usually transport it for you.
Trade it in - Some dealerships will accept trade-ins with a salvage title, though you're not going to get the best amount for it.
Repair it yourself -If you have shopped it around and are still not finding a decent transaction, you could always try to repair it yourself and use it. Just remember, insurance costs are going to be sky high because it has a salvage title.
Donate to charity - If all else fails, you could donate the vehicle to charity and claim a tax credit. Even if the car is not in driving condition, the charities could sell the parts or scrap metal.
What can you do to be proactive and prepare in case your car gets totaled?
No one likes to believe that they will ever be in a car crash, let alone have their car totaled, but those who think about it in advance are much more prepared when it does happen.
The most obvious option is to purchase gap insurance. That policy would cover the difference between what your insurance policy would pay for the value of the car and what you still owe. When purchasing or leasing your car, the last thing you want to do is add more money to your monthly payment, but considering the return on investment, if you do get into a crash, it may be worth a few extra bucks every month.
If you don't want to go to the official gap insurance route, you could set up your own savings plan. Put some money aside each month into a separate account as an "in case of emergency" fund. The downside is that you will be in charge of putting the money in the account, and if some months you are short, your savings account will feel the pinch. The upside is if you do end up crashing your car and having it totaled, you will have a cushion to make up the difference between what insurance policy pays out what you owe.
One last option to consider: rental car insurance. It is not included in every policy unless requested. It's only a few dollars extra, but it's peace of mind when you need it most.
Cheap car insurance companies if your car is totaled and you're at-fault
Most insurers will increase your premium for 3 to 5 years if you are at fault in a crash. Your best bet is to find the cheapest insurance possible for that period.
Based on Insurance.com's rate analysis, Geico is the cheapest car insurance company for drivers with a recent accident claim. Here is how car insurance companies rank on price for those with an accident on their record.
| Accident | Geico | Mid-Century | Progressive | Farmers | Nationwide | Allied | Allstate | Victoria | Foremost |
|---|---|---|---|---|---|---|---|---|---|
| Property damage under $2K | $1,570 | $1,815 | $1,789 | $2,050 | $2,005 | $1,830 | $2,678 | $3,138 | $4,024 |
| Property damage over $2K | $1,578 | $1,815 | $1,816 | $2,050 | $2,450 | $2,523 | $2,631 | $3,138 | $4,024 |
| Bodily injury | $1,593 | $1,815 | $1,827 | $2,050 | $2,329 | $2,523 | $2,861 | $3,138 | $4,974 |
| 2 property damage accidents over $2k | $2,507 | $2,374 | $3,743 | $2,626 | $3,391 | $3,195 | $4,235 | $5,902 | $5,299 |
By subtracting the lowest rate from the highest, you can see below how much you can potentially save by comparing rates after an accident based on Insurance.com's data.
- At-fault bodily injury - $3,381
- At-fault property damage under $2,000 - $2,454
- At-fault property damage over $2,000 - $2,446
- Two at-fault property damage over $2,000 - $2,792
Victoria and Foremost specialize in insurance for high-risk drivers, so it's not surprising that rates are among the highest for those companies after an accident claim. If you were to calculate average savings for standard car insurance companies in the chart above, the saving would be as follows:
- At-fault bodily injury - $1,268
- At-fault property damage under $2,000 -- $1,108
- At-fault property damage over $2,000 -- $1,053
- Two at-fault property damage over $2,000 -- $1,861
How much does insurance go up after an accident?
An at-fault accident will drive up your car insurance rates, whether you stay with your old company or find a new one. But no two companies view claims the same way.
If the accident was your fault and your rates go up, you want to compare car insurance quotes from multiple providers to ensure you're receiving the best rate available. For instance, you'll see below how much rates vary by insurance company after an accident claim -- and how much you can save.
| Accident or comp claim | Average % increase | Average $ increase |
|---|---|---|
| 1 At-fault bodily injury accident | 32% | $459 |
| 1 At-fault property damage accident over $2K | 31% | $450 |
| 1 At-fault property damage accident under $2K | 26% | $366 |
| 1 comprehensive claim for over $2k | 3% | $39 |
| 1 comprehensive claim for under $2k | 3% | $39 |
| 2 At-fault property damage accident over $2k | 110% | $1,572 |
| 2 comprehensive claims for over $2k | 8% | $121 |
Frequently asked questions
How does the insurance company determine the value of a totaled car?
Adjusters use comparables in the area to help determine the ACV or the car's actual cash value. An important fact to keep in mind is that the ACV is the car's value just before the crash. Damages from the crash are not included in the total.
Other factors and determine the value include to make, model, year, and condition of the car before the crash.
Can I keep my car and repair it myself?
Usually, a damaged car is auctioned at a salvage yard, and the insurance company keeps the proceeds of this sale.
So how do you keep a totaled car? If you want to keep your damaged car, and it's permitted by state law, your company will get bids from salvage buyers to set the fair market value on the salvage -- and will deduct this amount from your settlement.
Many states require the title to be changed to a "salvage title," which means you will not be able to register for plates until you complete the repairs and apply for a new title.
You might not be able to buy collision and comprehensive coverage on a rebuilt-title car, though, as its value is hard for an insurance company to pin down.
Will the insurance company buy me a new car?
If your car is very new -- say, less than three months old -- most major insurance companies will replace it with a new car.
But beyond that point, some companies offer guaranteed replacement coverage at an extra cost, so you don't have to worry about how much you'll be paid -- it will cover a new car.
If you don't have this coverage, your company is required to "make you whole," as defined in your policy. This means your company will pay you the actual cash value of the car -- what it was worth the minute before it was totaled -- minus the deductible for the collision coverage on your policy.
An insurance company is not obligated to pay off your loan, only to pay you what your car was worth -- even if that leaves you thousands of dollars in debt. For that reason, many buyers add gap insurance to their coverage; it will pay off the balance due to the lender if (and only if) the car is totaled.
How long does it take to get the insurance check for a totaled car?
Most companies will issue payment within a few days of finalizing the actual cash value. If you leased the car, the payment goes directly to the leasing company. If you financed the car, the payoff amount goes to the finance company or bank, and you get the rest. Finally, of course, if you own the car yourself, you get the entire check.
How do insurance companies determine if a car is totaled?
An adjuster will need to come to see the car. Once they determine the ACV (actual cash value), they will let you know what they have found.
Do I have to accept the insurer's offer on a totaled vehicle?
No. You can always negotiate after you hear back from your adjuster.
The best route to success in this area is to do your research. Find out what comparable cars are selling for in your area. You can also ask how to recoup the sales tax costs, title and registration on the replacement vehicle.
In addition, you can collect the cost of sales tax, title and registration in 34 states.
What happens if a leased car is totaled?
With a leased car, the insurance policy will pay out the value of the car. That amount is first to go to cover any outstanding payments. Typically, with a leased car, there is still money left over that needs to be paid to the lease company.
If you are a forward thinker, you could consider taking out a gap policy when you leave your car. This is meant to cover the difference between what your policy will pay and what you owe.
Can I sell a totaled car?
Usually, state laws have to be followed, but generally, if a car is totaled by adjuster, there are a few options. Most people will just take the payout from their insurance company and let them handle it. However, you could get a salvage title and attempt to sell it on your own to either a dealership or a private party. Keep in mind the salvage certificate will stay with the car as long as the car is around. This means most warranties will be voided, as well there will be higher insurance costs, so it's not always the easiest transaction to complete. If these avenues don't work, you can always sell it to a junkyard or donate it for a tax credit.
Before you start shopping, understand how to compare car insurance.
How Much Damage Do You Need to Total a Car
Source: https://www.insurance.com/auto-insurance/claims/understanding-your-options-for-a-totaled-car.aspx
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