Get an insurance quote

What Happens When Your Car Is Totaled?

If you’ve been in an accident and your car takes a serious beating, it will probably be considered totaled by your insurance company. But what does it actually mean if your car is totaled, and what do you do about it?

The two types of insurance coverage you’ll want on your car insurance policy are collision and comprehensive coverage.

Here’s a quick breakdown of what’s considered a “total loss car” and what to do if your car is totaled to help you get back on the road and keep your dreams moving forward.


Table of Contents

When Is A Car Considered Totaled?

If the Airbags Deployed, Is the Car Considered a Total Loss?

How Is Total Car Loss Value Calculated?

What Happens When Your Car Is Totaled and You Are Not at Fault?

What Happens When an Insurance Company Totals a Car?

Do You Have to Pay Your Deductible If Your Car Is Totaled?

What Happens to My Car if It’s Totaled?

When a Car Is Totaled, What Does My Insurance Pay?

Can I Buy Back My Totaled Car?

If My Car Is Totaled, Do I Have To Pay Off the Loan?

How Does Gap Insurance Work After a Car Is Totaled?

When Is a Car Considered Totaled?

A car is considered totaled when it’s deemed to be a total loss after something unexpected happens. Insurance companies determine a car to be totaled when the vehicle’s cost for repairs plus its salvage value equates to more than the actual cash value of the vehicle.

So, how does your insurance determine a totaled car’s value? Appraisers will estimate the cost of repairs, then determine if the cost to repair the vehicle — including things like cost of replacement parts, salvage value and labor fees — will equate to more than what the car is actually worth.

You might take one look at your car and figure you won’t be getting behind its wheel anytime soon, but your insurance company will actually decide whether your car is considered totaled. So, when your insurance totals your car what value do they use? They’ll likely use the vehicle’s actual cash value to determine the worth of the car when your vehicle is a total loss.

Back to top

If the Airbags Deployed, Is the Car Considered a Total Loss?

Not necessarily! Deployed airbags are not an immediate qualifier for a total loss. If, however, the cost of replacing the airbag is more than the value of your car, your vehicle will likely be a total loss.

If you have questions about airbag replacement after an accident, friendly insurance agents are available to help!

Back to top

How Is Total Car Loss Value Calculated?

Your car’s actual cash value (ACV) is the amount your auto insurance carrier will typically pay you after it's been totaled in a covered loss or accident. The value of your car’s ACV is defined by your car insurance company according to your vehicle’s pre-collision value — minus your deductible.

Using the information below, we’ll take a closer look into how a total loss value is calculated.

Actual cash value

A claims adjuster can calculate your car’s actual cash value. To do this, the adjuster evaluates your vehicle's condition and produces an estimate of its worth based on the make, model, year, mileage, and vehicle options.

Salvage value

The resale value of the parts and the metal — the car’s salvage value — is calculated. If it’s not more than the actual cash value of the car, then it’s considered totaled.

Cost of repair

The adjuster will estimate the cost of repairing your vehicle to see if it’s higher or lower than its actual cash value. If it’s combined with the salvage value and turns out to be higher than its actual cash value, the car is considered totaled.

Back to top

What Happens When Your Car Is Totaled and You Are Not at Fault?

In situations where an accident results in a total loss at the fault of another driver, the at-fault driver's insurance will usually pay you the value of your totaled vehicle.

But what happens when your car is totaled and there isn’t another driver at all? If your car is damaged beyond repair as a result of a falling object, for example, and you have comprehensive coverage insurance, your insurer will likely pay you the cash value of your vehicle (minus the deductible).

Back to top

What Happens When an Insurance Company Totals a Car?

If you’re in an accident and your insurance company determines your car is totaled, here’s what happens next:

  • Your claims adjuster will probably ask you for any keys to the vehicle and will have you remove all personal items in it
  • You’ll also need to connect with your finance or leasing company to let them know your insurance company will be contacting them
  • Once your vehicle is considered totaled, insurance will pay you a cash settlement, which is a check in the amount of the actual cash value on your vehicle
  • If you leased the vehicle, the payment goes directly to the leasing company, and if you financed the car, the bank or finance company will receive the payment for what you still owe, and the remainder will be given to you

Of course, if you own your vehicle free and clear, you’ll get the full amount and can use it to purchase a replacement vehicle.

Back to top

Do You Have to Pay Your Deductible If Your Car Is Totaled?

The short answer: yes. In order for your insurance company to pay out on the claim, you’ll have to pay your deductible first.

Back to top

What Happens to My Car If It’s Totaled?

Usually, the insurance company will take ownership of your vehicle by transferring the title to their name. After that, they’ll likely sell it to a salvage buyer. If you decide to keep your car, the salvage value will be deducted from your settlement total. Some states have specific guidelines relating to owner-retained total losses, so be sure to check with your claims adjuster to fully understand what this entails.

Back to top

When a Car Is Totaled, What Does My Insurance Pay?

Generally, your auto insurance will pay for the actual cash value of your car, minus your deductible, after it’s determined to be totaled. Once you’ve received your settlement, you can start the process of purchasing a new vehicle to replace your totaled one.

Back to top

Can I Buy Back My Totaled Car?

Many insurers will allow you to buy back a vehicle that’s been “totaled out” if you want to repair it and make it roadworthy again. If you’re wondering “how do I buy back my totaled car?” you’re best to get in contact with your insurance agent. But you should be aware that you may have to pay out of pocket to cover the cost. After meeting your deductible, you’ll be given the actual cash value of the vehicle, but if you still owe money on the loan, you may need to pay the balance in order to get the title transferred over to you from your lender.

Back to top

If My Car Is Totaled, Do I Have To Pay Off the Loan?

Okay, you’ve accepted that your car is a total loss. But what if there’s still a loan on the vehicle? Are you responsible for paying the balance?

Usually with a total loss, your insurance company or the at-fault driver’s insurance company will cut a check for your car’s actual cash value. If you’re financing your vehicle, the insurance company will pay that amount to the lender, and if there’s any remaining money, it’ll be paid out to you. So, the short answer is, as long as your car is insured, you or your lender will be reimbursed for its actual cash value if it’s been totaled. This reimbursement is then usually used to pay off the loan.

Back to top

How Does Gap Insurance Work After a Car Is Totaled?

Keep in mind, there is such a thing as still owing money to your lender after you receive payment from the insurance company. Why? Because the insurer is only obligated to pay you for the fair market value of your car, and sometimes when you’re financing a car, you’ll owe more money on it than it’s actually worth. This is called being upside-down, and it’s a great reason why you should have auto lease or loan gap coverage.

Gap coverage is an additional auto coverage you can add to your policy so in the event you’re upside-down when your car is totaled, it’ll pay for the gap between what your car is worth and what you still owe to your lender.

Another important detail about this coverage is that the loan must be a vehicle loan and be taken out only to purchase the vehicle. So, if you use a home equity loan to purchase a vehicle, this coverage would not be available. Additionally, it doesn’t pay for items such as extended warranties, credit life insurance, loan rollover balances or late payment penalties and fees.

Back to top

Stay Protected With Car Insurance

Having a totaled car isn’t a fun situation to deal with, but knowing what comes next can help reduce some of the stress. Connect with your American Family Insurance agent to find out just the right auto insurance coverages to protect you from the unexpected.


How would you rate this article?

Related Topics: Car Insurance , Car Maintenance , Car Safety