Table of Contents
- What Is a Totaled Car?
- What Insurance Covers When a Car Is Totaled
- How Is a Totaled Car’s Value Determined?
- What Is a Total Loss Threshold?
- Total Loss Threshold by State
- Steps to Take When Your Car Is Totaled
- Pros and Cons of Keeping a Totaled Car
- Tips for What To Do If Your Car Is a Total Loss
- FAQ
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, 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.
Key Points
• Total loss thresholds vary by state, ranging from 60% to 100% of a car’s actual cash value (ACV).
• Some states, including Georgia, use a total loss formula, considering repair costs against fair market value minus salvage value.
• There are several steps to take when your car is totaled, including filing a claim, contacting your lender, and negotiating the claim with the insurer.
• Insurers may declare a car totaled if repair costs are close to the ACV, often around 75%.
• Understanding state-specific thresholds is important for navigating insurance claims after an accident.
What Is a Totaled Car?
According to insurance companies, a car is considered totaled if it 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 caught in a flood usually sustain so much damage that it’s common for them to be deemed a total loss.
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What Insurance Covers When a Car Is Totaled
If damaged, you may wonder how much your car is worth. When an insurer considers a car to be totaled, they reimburse the owner for the ACV, the amount the car was worth right before the crash or incident occurred.
The ACV is different from what you paid for the car. That’s because the original purchase price is reduced over time by depreciation. The ACV is also typically lower than the car’s replacement cost.
Recommended: What Does Car Insurance Cover?
How Is a Totaled Car’s Value Determined?
As mentioned above, online auto insurance companies evaluate totaled cars based on their condition and mileage just before the accident or incident. Other factors include the vehicle’s make, model, and age, and where you live.
What Is a Total Loss Threshold?
The total loss threshold is the percentage of a vehicle’s ACV at which the cost of repair leads the insurance company to declare the vehicle a total loss rather than repairing it. This percentage varies by state (for example, it’s 75% in Alabama). Insurance companies must meet the state’s minimum, though they can apply a lower percentage.
An insurance company may consider a car totaled even when repair costs are less than its ACV, sometimes significantly less. That’s because when assessing a damaged car, the insurance adjuster is limited to a superficial visual inspection. Insurers recognize that more damage is often uncovered during the repair process, when the mechanic takes a close look at hidden components. (You may find this rundown of car insurance terms helpful.)
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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 minus its salvage value.
| 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 | 80% |
| 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 World Population Review
Steps to Take When Your Car Is Totaled
After an accident, you probably know to call the police first and then alert your insurance company. But then what? Here are the steps.
1. 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 to be at fault.
If you’re without a vehicle, you may be interested in finding out the cheapest way to rent a car.
2. Assess the Damage
Your insurance company may direct you to one of its 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. The insurer should accept it as long as the estimate seems reasonable.
3. Know Your Car’s Fair Market Value
You can use sources such as 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.
4. 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 above the loan amount is yours.
If you have a gap insurance policy on the totaled car, it will pay off your lender if your insurance reimbursement doesn’t cover all that you owe on the vehicle.
5. 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 seems 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.
6. Shop for a New Car
You could wait two to four weeks to receive a reimbursement check from your insurer. 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.
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 receives less money 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. They may end up getting more money than the insurance company would pay out, but it’s not guaranteed. Instead, they may 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 ACV because more damage is typically found during repairs. That amount is called the total loss threshold. The legal threshold varies by state but generally ranges from 60% to 100% of a vehicle’s value.
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FAQ
What is the percentage before a car is considered totaled?
This is referred to as the total loss threshold. After an accident, if repairing a damaged car will cost close to its actual cash value, typically 75% or more, then the insurer may consider the car totaled.
What is the total loss threshold for GA?
Georgia uses the total loss formula. 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?
The total loss threshold depends on the state in which the accident occurs and your insurance policy. Most states have thresholds ranging from 60% to 100% of a car’s value. Insurance company thresholds may be lower, but by law, they can’t be higher.
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