When is Your Car a Total Loss?

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Smash! You never saw it coming — a driver runs a red light, slams into the side of your vehicle, leaving behind a trail of twisted metal, broken glass and thousands of dollars in damage.
Air bags saved the day for you and the other driver, but your car is a wreck. Depending on where you live and your auto insurance company, your vehicle may be totaled or repaired. We’ll examine a few factors concerning major wrecks, including what constitutes a total loss and salvage title, and how each one may impact you going forward.

From the Eyes of Your Insurer

Policy holders and insurance companies evaluate damage differently. Where you may view the damage as a total loss, the insurer may look at your car as one that can be fixed. The bottom line for insurers is helping their bottom line — the cheapest option is typically chosen whether you like that decision or not.

The insurance companies are regulated at the state level, therefore each state sets the criteria for when a vehicle is declared a total loss and a salvage title is issued. That threshold is lowest in Iowa at 50 percent, and highest in Colorado and Texas at 100 percent.

Total Loss Formula

In 21 states, determining total loss is based upon a total loss formula or TLF. Here, the insurer determines the cost of repairs plus the scrap value. If it equals or exceeds the actual cash value (ACV) of your car before the accident, then it is totaled. If it comes in lower, then your car may be fixed and returned to you.

What consumers won’t know is how Company A determines car value or how it stacks up against the competition. Based on TLF, Company A may assign one value leading to a total loss declaration, while Company B may see your car as repairable. In any case, if you are unhappy with the appraisal, then challenge it. Insurers will typically reevaluate their decision, giving you a chance to come away with a better deal.

When you have an accident, call your insurer. An appraiser will be sent out to evaluate your car, taking into consideration such factors as the make, model, model year, trim or options, mileage and the condition of your car.

How Your State Compares

Which states use TLF? How to do the other states that don’t use TLF compare? Let’s examine what CarInsurance.com discovered when they explored total loss thresholds by state.

TLF states (21): Alaska, Arizona, California, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Maine, Massachusetts, Montana, New Jersey, New Mexico, Ohio, Pennsylvania, Rhode Island, South Dakota, Utah, Vermont and Washington.

100 percent threshold (2): Colorado and Texas

80 percent threshold (3): Florida, Missouri and Oregon

75 percent threshold (16): Alabama, Kansas, Kentucky, Louisiana, Maryland, Michigan, Nebraska, New Hampshire, New York, North Carolina, North Dakota, South Carolina, Tennessee, Virginia, West Virginia and Wyoming.

70 percent threshold (5): Arkansas, Indiana, Minnesota, Mississippi and Wisconsin.

65 percent threshold (1): Nevada

60 percent threshold (1): Oklahoma

50 percent threshold (1): Iowa

Car Insurance Considerations

You may live in a no-fault state, but that doesn’t mean the insurer isn’t aware of who is at fault in an accident. In the example shared here, the other driver is at fault, so that means you’re entitled to a rental car while your claim is being considered or your car repaired.

The rental car may be offered for 30 days or until your claim is settled. In the meantime, begin shopping for a replacement vehicle if your car is totaled.

If your car is totaled and you want it back, your insurer may allow you to have it. Here, the insurer will determine your car’s cash value, then subtract the deductible and the salvage value. But be forewarned: your car will now carry a salvage title and may be more difficult to insure even if it has been repaired.

Consider Gap Protection

One of the biggest shocks for owners of totaled cars being financed is how large the deficiency is between the settlement amount and what they owe on the car. Had the owner opted for gap protection, the difference between the loan balance and insurance payment would have been erased, effectively canceling the debt.

Your insurance company, lender, and online vendors offer gap protection, although some insurers include it with their general coverage. Review your policy and plan accordingly.

Shopping for a used car? Start your search with CARFAX Used Car Listings, where every car comes with a free CARFAX Vehicle History Report. Also, be sure to follow us on Facebook and Twitter.

By | 2018-06-19T15:50:39+00:00 May 18th, 2016|Inspecting a Vehicle|5 Comments


  1. Rob May 24, 2016 at 7:15 pm - Reply

    We’ve had many customers with total’d cars show up at our shop over the years. Usually the stories end in tears, but sometimes it doesn’t. When it doesn’t, it’s because the owner usually has gap insurance. This is why we always recommend people get it on their newer cars.

  2. Salvage Now June 28, 2017 at 11:28 am - Reply

    It is always good to have a check up done before you can decide the Car is of no use.

  3. Dave Ghislein October 23, 2017 at 11:00 pm - Reply

    When did Texas go to 100%? I’m being told by my attorney that it is 75%.

  4. Robert Spengler September 1, 2018 at 3:32 pm - Reply

    What is the current threshold rate in Delaware as of March, 2018?

  5. Kelly Robotnik December 4, 2018 at 7:11 pm - Reply

    Minnesota Total Loss Threshold is 80% now
    Subdivision 1. Salvage titles.
    (a) When an insurer, licensed to conduct business in Minnesota, acquires ownership of a late-model or high-value vehicle through payment of damages, the insurer shall immediately apply for a salvage certificate of title or shall stamp the existing certificate of title with the legend “SALVAGE CERTIFICATE OF TITLE” in a manner prescribed by the department. Within ten days of obtaining the title of a vehicle through payment of damages, an insurer must notify the department in a manner prescribed by the department.
    (b) A person shall immediately apply for a salvage certificate of title if the person acquires a damaged late-model or high-value vehicle with an out-of-state title and the vehicle:
    (1) is a vehicle that was acquired by an insurer through payment of damages;
    (2) is a vehicle for which the cost of repairs exceeds the value of the damaged vehicle; or
    (3) has an out-of-state salvage certificate of title as proof of ownership.
    (c) A self-insured owner of a late-model or high-value vehicle that sustains damage by collision or other occurrence which exceeds 80 percent of its actual cash value shall immediately apply for a salvage certificate of title.
    Subd. 2. [Repealed, 1993 c 93 s 20]
    Subd. 3. [Repealed, 1993 c 93 s 20]
    Subd. 4. Junking certificate required. When a person acquires ownership of a vehicle that is an unrepairable total loss vehicle, the person shall surrender the assigned certificate of title to the department and apply for a junking certificate of title.
    Subd. 5. [Repealed, 1993 c 93 s 20]
    Subd. 6. Authority under junking certificate. A junking certificate authorizes the holder only to possess and transport the vehicle, except that a salvage pool or insurance company, or its agent, may sell an unrepairable total loss vehicle with a junking certificate to a licensed used parts dealer or a licensed scrap metal processor

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