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What to do when your car is totaled

When your car is totaled, the insurance company has an obligation to "make you whole," as is defined in your policy. This essentially means you need to be placed back in approximately the same financial position (with respect to the item insured -- not in respect to any liens or leases that hold title to your car) you were in before the accident occurred.

Most policies value your vehicle using actual cash value. Actual cash value (ACV) basically means replacement value less depreciation. The insurance company looks at the value of the vehicle, in the condition it was in the moment before the accident occurred, to determine its ACV.  (Find out more here on how the actual cash value is determined by insurers).

If you have physical damage coverages (comprehensive and collision), then if your insurance company is the one covering your totaled vehicle they will typically write you a check for the actual cash value of the vehicle, minus the deductible that is due. 

If your car were totaled out by another driver that was at-fault, then that person's property damage liability coverage should pay out ACV for your vehicle, but no deductible will be due.

If the car is financed or leased, then the title holder that you have listed as a loss payee on your car insurance policy will also need to be involved in the settlement process.  Don't try to keep the settlement check for yourself -- that could lead to problems.

If you are "upside down" (owe more on a car than it's worth), then you should consider gap insurance.  This is because if the cash value of the vehicle is less than your current loan amount and your car is totaled out you will be responsible for the remaining balance of your loan after ACV is paid out by the auto insurer. The terms of this payment are set through your loan contract.

During the settlement process, you will sign over your totaled out vehicle to the insurance company that is paying you ACV for it.  The vehicle then becomes their property, which they will usually sell at auction to recoup some of the money paid out on the claim. If you'd like to keep the totaled vehicle and fix it on your own, then you can see if you buy it back from the insurance company.

If your car has been totaled, gauge your coverage options using our car insurance calculator. Make certain before insuring a new car with your current auto insurance provider that you are getting the cheapest premiums possible.

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16 Responses to "What to do when your car is totaled"
  1. Zed

    I was involved in a three car accident. I hit the car in front of me and I was also rear ended. My insurance just told me that my car is totaled. Do I have a recourse to claim against the car that hit me?

  2. Jeri

    Our 10-year-old car was hit. The other driver was deemed at fault and assumed liability on his insurance. Our car is worth by KBB approx $4,100. Our estimate to repair to pre-accident condition was approx $3,900. The insurance appraiser estimated damages at approx $3,700. The insurance co says it is a total loss. However, the car has only cosmetic damage to rear passenger door, and slightly to driver door and rear wheel well. It is totally drivable, no mechanical or structural damage, and is otherwise in very good condition. The insurance company is offering us approx $3,600 which includes deduction of "salvage fee" of approx $400, and said we can keep car and do as we wish with it. We wish to repair the car to pre-accident condition. Question--What will happen to the title of this car if we accept the insurance stating it is a "total loss" when in fact notwithstanding the age and mileage (approx 130,000), the car is in very good drivable condition? Will we have a problem with the title when the time comes to sell this car, if it is deemed a total loss from this accident?

  3. John


  4. Visitor

    I was in an accident 1 month after I purchased my car. The insurance company paid the street value of the car which is what I owed the bank; however, I put $2,500 down when I purchased. Does Gap help with that? Otherwise will I just lose the $2,500 and am out of a car at the same time?

  5. Visitor

    I recently was in a single vehicle accident and totalled my truck. Been driving for 38 years and have never been involved in such an accident. My father always told me, when you buy a new vehicle spend the extra money on gap coverage. It hase been more than a week since the accident, I don't know much yet about how the insurance company is handling this. I am "upside down" with the lien holder. Reading the above gap coverage description has helped clarify some questions I have when they inform me about e total loss amount the will pay. Thank you.

  6. Anonymous

    What do you do when the insurance company for the person that hit you refuses to give you the value of your vehicle so u can replace it? This site should tell victims what they can do to be made whole without having to go to a lawyer. My figures for the value of my vehicle based on NADA, KBB, and ads from private sellers and dealers is almost double what their insurance says it is worth. I couldnt find anything on your site to tell me what my options and rights are.

  7. Anonymous

    Doesnt give enough information, leave you hanging?

  8. Anonymous

    Thanks for this website. My vehicle, though 12 years old and sound...great car; was totaled after someone nailed it pulling out of their driveway. We are not in the market for a new car...this was our family car and now its totaled. The engine and trans are great, but the frame is shifted and a lot of front end damage. Too much to repair even with used parts. Problem is that we have to get another vehicle. I want one comparable to what I had. The other drivers insurance is limiting the rental time so we are scurrying to find another car. I think its unfair that we have to be hammered into finding a vehicle in so little time and the fact that we dont have the money. The owners ins.co told us to overnight the title and lien release and they would overnight the check. Now they want to pick up the vehicle asap even before they get title or the check doesnt get released.Weve had to jump through hoops, take time off work and make other arrangements because some jerk totaled my car...

  9. Anonymous

    i think that this answers are really good cause almost nobody know the answers

    1. John August 08, 2012 at 10:07 AM

      I totally agree

        Reply »  
  10. Anonymous


  11. Anonymous

    I was trying to find out how much my insurance would go up if I had an accident.

  12. Anonymous

    it doesnt tell me what they actually do with the car.

  13. Anonymous

    I am curious if they take your car away.

  14. Anonymous

    Please tell me: If the car is totaled what is used to determine the basis of the vehicles replacement value in Arizona, i.e. is it the Trade In Value, Private Party Value or Suggested Retail Value from the Blue Book? Are they required to base value on the Blue Book?

  15. Anonymous

    Please tell me what will happen when the accident is at fault and person has third party insurance. Will he get paid for the value of his car?