When is a Car Considered Totaled?

What Does It Mean When a Car Is “Totaled”?

After a major accident, your insurance company may say your car is “totaled.” But what does that mean?

Simply put:

A car is considered totaled when the cost to fix it is more than what the car is worth.

How Insurance Companies Decide

When a car is damaged, your insurance company compares:

1. The cost to repair the car

2. The car’s actual cash value (ACV) — what it was worth before the accident

If the repair cost is more than the car’s value, or close to it, the insurer will likely declare it a total loss.

Example:

If your car is worth $10,000 and repairs would cost $8,000, the insurance company might consider it totaled, especially if your state uses a 75% threshold.

It Varies by State

The definition of a totaled car varies by state, but in most cases, a car is considered a total loss when the damage exceeds 70% to 80% of its actual cash value.

So, depending on where you live, the percentage used to declare a total loss could be different. Your insurer will follow the rules set by your state.

What Happens If My Car Is Totaled?

If your car is declared a total loss:

1. Your insurer will pay you the vehicle’s value, minus your deductible.

2. You can use that money to buy a replacement vehicle.

3. The damaged car usually goes to a salvage yard — unless you choose to keep it.

What If I Still Owe Money on the Car?

If you’re still financing or leasing the car:

• The insurance payout goes to your lender first.

• If the payout is less than what you owe, you’ll have to pay the remaining balance — unless you have GAP insurance, which helps cover that difference.

Tip: Ask your agent if GAP coverage is right for your loan or lease.

What Should I Do If I Think My Car Is Totaled?

1. Claim with your insurance company

2. Take clear photos of all the damage

3. Get an estimate or let your adjuster inspect the vehicle

4. Review your options before accepting a settlement

Not Sure If You’re Covered? Let’s Talk.

If you’re unsure whether your current policy covers a total loss — or if you want to better understand how these decisions are made — we’re here to help.

Call Klinger Insurance Group at 301-428-4935 to speak with a local agent today.

We’ll review your policy, explain your coverage, and make sure you’re prepared for the unexpected.