A car is typically considered totaled when the insurance company determines it will cost more to repair than the vehicle is worth. Beyond that, states have their own guidelines for when a car should be declared totaled. That guideline is called the “total loss threshold.”
Learn more about the different thresholds for totaled cars in each state, and what to do if your car is totaled in an accident.
What Is a Totaled Car?
A totaled car, according to insurance companies, costs more to repair than its current book value. An insurance company can also declare a car totaled when the vehicle may be unsafe to drive even after repairs are complete.
Not all damage is the result of a crash. Vehicles that are caught in a flood usually sustain so much damage that it’s common for a flooded car to be deemed a total loss.
What Insurance Covers When a Car Is Totaled
When an insurer considers a car to be totaled, they reimburse the owner for the “actual cash value,” or ACV. That is the amount the car was worth right before the crash or incident.
The ACV is not the same as what you paid for the car. That’s because the original purchase price is reduced over time by depreciation. The ACV is also typically less than what it will cost to replace the car, known as replacement value.
How Is a Totaled Car’s Value Determined?
As mentioned above, insurance companies evaluate totaled cars based on their condition and mileage just before the accident or incident. Other factors include make and model, age, and where you live. For more on this topic, see How Much Is My Car Really Worth?
What Is a Total Loss Threshold?
An insurance company may consider a car totaled even when repair costs are less than its ACV — sometimes quite a bit less. That’s because when a damaged car is assessed, the insurance adjuster is limited to a superficial visual inspection. It’s recognized that more damage is often uncovered during the repair process, as the mechanic takes a close look at hidden components. (By the way, some drivers might find this rundown of car insurance terms helpful.)
The total loss threshold is a set percentage of the ACV where a vehicle is still considered totaled. Each state sets its own percentage; the threshold for Alabama, for example, is 75%. Insurance companies may use a lower percentage, but they must meet the state’s minimum.
Total Loss Threshold by State
You can find your state’s total loss threshold in the table below. For states that use the “total loss formula,” the threshold is set as the vehicle’s fair market value less its salvage value.
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| State | Total Loss Threshold |
|---|---|
| Alabama | 75% |
| Alaska | Total loss formula |
| Arizona | Total loss formula |
| Arkansas | 70% |
| California | Total loss formula |
| Colorado | 100% | Connecticut | Total loss formula |
| Delaware | Total loss formula |
| Florida | 80% |
| Georgia | Total loss formula | Hawaii | Total loss formula |
| Idaho | Total loss formula |
| Illinois | Total loss formula |
| Indiana | 70% | Iowa | 70% |
| Kansas | 75% |
| Kentucky | 75% |
| Louisiana | 75% | Maine | Total loss formula |
| Maryland | 75% |
| Massachusetts | Total loss formula |
| Michigan | 75% | Minnesota | 70% |
| Mississippi | Total loss formula |
| Missouri | 80% |
| Montana | Total loss formula | Nebraska | 75% |
| Nevada | 65% |
| New Hampshire* | 75% |
| New Jersey | Total loss formula | New Mexico | Total loss formula |
| New York | 75% |
| North Carolina | 75% |
| North Dakota | 75% | Ohio | Total loss formula |
| Oklahoma | 60% |
| Oregon | 80% |
| Pennsylvania | Total loss formula | Rhode Island | Total loss formula |
| South Carolina | 75% |
| South Dakota | Total loss formula |
| Tennessee | 75% | Texas | 100% |
| Utah | Total loss formula |
| Vermont | Total loss formula |
| Virginia | 75% | Washington | Total loss formula |
| Washington D.C. | 75% |
| West Virginia | 75% |
| Wisconsin | 70% | Wyoming | 75% |
Data courtesy of Policy Genius
Steps To Take When Your Car Is Totaled
After an accident, you probably know to alert your insurance company as soon as possible. But then what? Here are the steps.
File a Claim
Filing a police report is not enough. You must contact your insurance company separately. Do so as soon after the accident as possible so they can begin working on your claim. You can also find out how much your insurance may go up after the accident, if you’re found at fault.
If you’re without a vehicle, our advice on the cheapest way to rent a car might interest you.
Assess the Damage
Your insurance company may direct you to one of their approved body shops for a review of the vehicle and its damage. If you have your own trusted body shop, ask the insurer if you can take it there. As long as the estimate seems reasonable, then the insurer should accept it.
Know Your Car’s Fair Market Value
You can use sources like Kelley Blue Book (KBB.com) and Edmunds True Value (Edmunds.com) to look up your car’s value. Just enter the make, model, and year. (Users of SoFi’s Financial Insights app also have access to our Auto Tracker.)
Besides online research, you can work with a dealership to get an estimate. No matter which route you go, this is important information to have because it will give you an idea of how much your insurer may pay for your car.
Contact Your Lender
If you owe money on the totaled vehicle, let your lender know about the accident. Your insurer will either pay off the lender directly (if you receive enough funds to cover the balance) or write a check for you to forward to the lender. If you receive more for the totaled vehicle than you owe, then the balance beyond the loan amount goes to you.
If you have a gap insurance policy on the totaled car, that will pay off your lender if your insurance reimbursement doesn’t cover all that you owe on the vehicle.
Negotiate the Claim With the Insurer
Depending on who is at fault, you may or may not need to pay your insurance deductible. If your insurance assessment feels off, you may want to negotiate the ACV or the cost of repairs.
If your negotiations are fruitless, switching car insurance is always an option. You can also contact your state’s department for insurance for help.
Shop for a New Car
It can take two to four weeks to get a check. States usually provide time frames in which a claim should be processed. Your insurance company can also give you an estimate on their typical processing time.
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Pros and Cons of Keeping a Totaled Car
Sometimes, a totaled car’s owner may want to hold onto it. This is known as an “owner-retainer option.” In this case, the insurance company will typically reimburse the owner the amount owed minus the salvage value.
The owner can take the payout and repair the vehicle to a drivable condition, which will likely cost less than buying a replacement vehicle. The downside is that the owner gets less cash and will need to get car insurance for the old vehicle, which can become a more expensive proposition than simply taking the cash. The owner may also keep the car and not fix it — or partially fix it — assuming that it’s drivable.
The owner can then sell the vehicle, perhaps to a salvage yard or other drivers for parts. You may end up getting more money than the insurance company would pay out. However, this isn’t guaranteed. Instead, you can end up with less money and more work.
Tips for What To Do if Your Car Is a Total Loss
These three tips can make the process easier.
• Gather your loan paperwork (if applicable), car title, and maintenance receipts to have all the information you may need at hand.
• Remove personal belongings, such as phone chargers and sunglasses, from the vehicle. In most states, you’ll need to give the state DMV your license plate. In some states, you can keep the plates and put them on your replacement car.
• Consider whether donating the car is a good option. You may be able to claim a tax deduction for your good deed (keep your receipt), but you won’t get the funds you would from selling the car.
The Takeaway
A car is considered totaled when the insurance company determines it will cost more to repair than the vehicle is worth. However, insurance companies often pick a figure that’s considerably lower than the vehicle’s actual cash value, because more damage is typically found once repairs have begun. That amount is called the “total loss threshold.” The legal threshold varies by state, but is typically between 60% and 100 of a vehicle’s value.
If you’re in the market for new auto insurance, SoFi can help. We partner with Experian to bring you a true comparison insurance shopping experience, using the right mix of technology and human interaction.
FAQ
What is the percentage before a car it totaled?
You’re referring to the “total loss threshold.” After an accident, if repairing a damaged car will cost close to its actual cash value — say, 75% or more — then the insurer may consider the car totaled. This threshold varies by state but is typically 60% to 100%.
What is the total loss threshold for GA?
Georgia is a Total Loss Formula state. That means that a car is considered totaled if the cost of repairs equals the vehicle’s fair market value minus its salvage value.
What is the threshold for totaling a car?
It depends upon the state where the accident occurs and your insurance policy. Most state thresholds are 60% to 100% of a car’s value. Insurance company thresholds may be lower, but cannot by law be higher.
Photo credit: iStock/Pakhnyushchyy
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