Wondering what to do with your totaled car? You're in the right place. Being involved in a car accident and seeing your car totaled can be tough to stomach, and that's before you consider working with your car insurance provider to work out what happens next. You have several options, and we’ll tell you the pros, cons and difficulties of each one.
We're assuming you owned the car when it was declared a total loss. If you were financing or loaning the car when it was totaled, click over to Total loss on a financed car.
How does the insurance company decide if the car is a total loss?
Each state has a total loss threshold. For example, if your state's threshold is 70%, that means that if the damage equals 70% or more of the car’s value, then the insurer will consider the car a total loss. Check out our list of total loss thresholds by state.
What to do with a totaled car: 5 options
1. Take the money
This is the most common route people take when their car is totaled. The car insurance company is essentially buying your damaged car from you. Your insurer or the at-fault driver’s insurer will tell you the car's actual cash value and offer to send a check with that amount. If you were at fault in the accident, the insurer will pay that amount, minus your deductible. Before you say yes in either situation, you should know that you can negotiate the payout on your totaled car.
When negotiating, you'll want to know how the insurer has determined the value of your car. Here's how they do it: They will find five cars that are "comparable" to yours to see their value. They'll leave out the most expensive car and least expensive car, and take the average price of the middle three cars. That's what they pay you. The problem with this process is that the insurer may not have accurately scouting the five cars. They may look at cars that are the lower end models, or cars with minimal accessories. Ask your insurer how they came to the price they're offering, and insist that they consider the exact model, accessories and mileage of your car before the accident. You may need to prove the value of your car, which requires receipts for anything installed on your car (receipts for maintenance and repairs won’t help you, because they theoretically only get your car to a driveable condition and don't raise the car's value).
2. Keep the car and fix it
For several reasons, you may want to keep the car and spend your own money to fix it. This makes sense if the car is still safe to drive but mostly cosmetic damage has made it a total loss, especially for older cars that hold sentimental value to you, or if the settlement money isn't enough to buy a replacement car. In this case, the insurance company deducts the salvage value (the money it expects to get for your wrecked car) plus the deductible if you were at fault, and you get the remaining money.
You then receive a salvage title for the car. This is opposed to a "clean title." It's the law that any car that has been determined a total loss by an insurance company have a salvage title, and it is fraud to claim your car as having a clean title if you decide to sell it later. You should know that it may not be easy to get car insurance on a salvage title car. Some companies won't insure them at all, and others will only offer liability insurance, not collision or comprehensive.
3. Keep the car and don't fix it
Similar to the option above, you may want to simply keep the car if it is safe to drive, and accept whatever cosmetic damage has deemed it a total loss. This is common with scratches, paint damage or severe dents, such as from hail damage. This also may good option if the payout from the insurance company isn’t enough for a replacement car.
4. Keep the car and sell it
When the car insurance company buys totaled cars, it sells its parts or materials. You may just want to do this yourself if you feel you are knowledgeable or skilled enough to receive more money for parts than the insurance company is offering you. Also, this may be an option if you work on cars and want to use the parts on another car.
5. Donate it
Donation services will tow the car for free and sell it for parts, and you'll get a tax deduction for the depreciated value. Many of these services will let you choose the charity that receives the money from your totaled car.