Total Loss: When Is Your Car Totaled?

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By |2020-03-27T16:44:53-04:00March 27, 2020 - 04:12PM|Inspecting a Vehicle|
totaled car or car wreck

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When Is Your Car Totaled?

If your car was damaged in an accident and it would cost more to fix than it’s worth, your insurance company may consider it a total loss (also referred to as “totaled”).

Whether a Car Is Totaled Depends on Where You Live

Whether your insurance company declares your car a total loss depends on where you live. New York state considers a car to be a total loss if the repairs total more than 75% of the vehicle’s current value. If you live in Texas, the same car would only be a total loss if the cost to fix it is at least 100% of its value. Some states, such as Georgia and Illinois, leave the “total loss” declaration standards up to the insurance company.

How Is a Car Declared Totaled?

When your car has been damaged in an accident and you file a claim with your insurance company, they’ll send a claims adjuster to examine your car and determine how much it will cost to fix.

Adjusters consider how many miles the car has been driven and the current condition of the car. By looking at comparable cars, the adjuster will estimate the actual cash value of your car before the crash. If the repair costs are more than that estimate, your car will most likely be considered totaled.

What Do You Do After Your Car Is Declared Totaled?

As long as you carry the right coverage, the insurance company will issue a check for the cash value of your car minus any deductible that you owe. If you have a newer car or are financing your car, you should carry collision and comprehensive insurance. Collision coverage protects you if you’ve been in a car accident. Comprehensive coverage applies if your vehicle was damaged by an act of nature, such as damage from a hail storm or a falling tree.

If you are leasing or financing the car, your insurance company might send a check made out to you or to the lienholder. If the check isn’t enough to pay the entire balance due on your loan, you will still owe your lender the difference. Gap insurance can protect you in this case – it’s meant to cover the difference between what an owner owes on a car and the market value. Otherwise, you may have to make payments on a car you no longer have.

In some cases, the insurance company may issue the check to both you and the lienholder. When that happens, call your lienholder to find out how the funds will be disbursed.

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What Happens to a Totaled Car?

If your car is declared a total loss, you should prepare it for pickup by your insurance company:

  • Remove all of your personal items and paperwork from the car.
  • Clear any personal information from your navigation and phone systems.
  • Remove the license plates.
  • Give your car keys and title to the insurance company. If you are unable to find the title to your car, contact your local DMV office.
  • When the insurance company comes to pick up your car, you may need to sign a document that acknowledges their right to take your car.

Some states may allow you to keep your car after it’s been totaled. This may be an option if you are looking for spare parts or if you are experienced in making repairs yourself. Keep in mind that if you make the repairs on your own, it may be hard for the car to pass inspection or for you to get another insurance policy.

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What Is Title Branding?

A title brand significantly affects the value of a car because it means the car has some serious issue that has been identified. There are different “brands” assigned to a title that will tell you what kind of damage that vehicle has. These include:

  • Lemon: This brand signifies a car with an extensive defect. These cars could be potentially unsafe to drive. State laws vary in their definition of a lemon. A car may be considered a lemon in one state but not in another.
  • Odometer: A car with this branded title had its odometer rolled back at some point. In this case, the car has more miles on it than what the odometer currently shows.
  • Salvage: A salvage title signifies that there’s been so much damage that it would cost more to fix the car than the car is worth. When an insurer determines that your car is a total loss, it will typically receive a salvage title brand.
  • Water: Water damage, such as the result of a flood, can cause serious problems to a car’s engine, electrical system and interior.
  • Hail: This brand signifies a car with extensive damage from hail. Since not all states record a title brand for hail damage, it’s important to closely inspect any used car that you purchase for this kind of damage.

Learn More About Title Branding Here

Get a Carfax Vehicle History Report

To protect yourself from getting stuck with a vehicle with a branded title, get a Carfax Vehicle History Report. These reports give buyers valuable information about a vehicle’s past, including total loss, accidents, flood damage, and service history. These reports will show a car’s title history and highlight problems with red alerts and symbols.

A Carfax Report can help you to identify if a car has had title washing, which can happen when a vehicle with a title brand is brought to another state that has different branding guidelines. If you are in the market for a used car, you can protect yourself by getting a Carfax Vehicle History Report.

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About the Author:

I have written about cars for more than a decade for publications including The New York Times, The New Yorker, Fortune, Vogue, Newsweek, Fast Company, Forbes, Marie Claire, Men’s Health, Robb Report, Town & Country, U.S. News & World Report and Refinery 29. As a U.S. juror to the World Car Awards, I test drive scores of new cars each year. So far, my reporting has taken me to five continents; by my count, I have eaten ice cream in more than 50 countries.