If you’ve been in a car accident and totaled your car, you’re not alone. In 2018 alone, there were 5 million car crashes that resulted in property damage. Furthermore, private passenger auto insurance companies had more than $162 million in incurred losses in the U.S. in 2019.
Here’s a breakdown by state:
- Note: Losses occurring within a fixed period whether or not adjusted or paid during the same period, on a direct basis before reinsurance.
- Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.
If your car’s been totaled in a crash but you don’t want to go through the hassle of buying a new car, you could buy your totaled car back from your insurer. Keep reading if you’re curious about buying your totaled car back from your insurance company.
Can you buy back your car from your insurance company?
After an accident, your insurance company will use the total loss formula in your state, which determines whether the cost of the repairs and scrap value of the car is equal to or greater than the actual cash value, or ACV, or your car prior to the crash. If it is, your car will be totaled. If the cost to repair your car is less than the ACV, your insurance company will repair it.
Typically, after the settlement is paid for a vehicle that is found to be a total loss, the damaged car goes to an auction or salvage yard, where it is auctioned to the highest bidder and used for parts. The insurance company keeps the proceeds of this sale.
Can I buy back my totaled car? Many insurers will allow you to “buy back” a vehicle they have totaled out if you wish to repair it and make it roadworthy again. If your insurer allows you to do this, you will have to inform your insurer right away if you want your car back.
Once it goes to the salvage yard, you will have little chance of getting it back since only licensed auto salvagers are normally allowed to attend these auctions.
How to buy back your totaled car? If you want to keep your damaged vehicle, some insurance companies will forgo the auction process and turn the car over to you. They will still have to pay you the actual cash value of the car but may deduct the amount the car would have brought at auction (salvage value); this is buying the vehicle back.
Should you buy back your totaled car?
It depends. Even if your insurer allows you to buy back the car, it may not be worth the time and expense to get it back on the road if your state has a number of special requirements you must satisfy, such as getting a salvage title or having the car inspected after it’s been repaired.
If the damage is only aesthetic or if the car has sentimental value, you could consider buying it back. But keep in mind that having a salvage title will seriously impact your ability to sell the car down the road. Additionally, if you find damage down the line that you hadn’t anticipated, you’ll be on the hook for the repair cost because you’ll likely only be able to get liability insurance coverage.
Also, some insurance companies will not insure a vehicle with a salvage title, so it may be difficult to find insurance for the vehicle now that it has a salvage title. Your best bet will be staying with your current insurer since they already know what’s wrong with the car.
Which states allow you to buy back your vehicle if it’s totaled?
Your state’s laws determine whether you can buy back a vehicle from an insurance carrier once it’s been declared a total loss.
For example, in Illinois, one cannot normally keep a vehicle after it has been declared a total loss. The Illinois Vehicle Code does not permit you the right to retain the salvage once the insurance company has deemed your automobile a total loss except for a couple of exclusions.
These exclusions are:
- If the vehicle has incurred only hail damage that does not affect the operational safety of the vehicle.
- If the vehicle is nine (9) model years of age or older.
Now, if your state does allow vehicles that have been totaled out to be bought back by individuals (and then given either a salvage title or rebuilt title), then it would next be up to the guidelines of an insurance company whether they would sell you back the car and how they determine the salvage value of the vehicle.
To find out about your state’s laws regarding buying back a totaled car contact your state’s insurance regulatory body and/or Department of Motor Vehicles.
How is the salvage value determined?
The salvage value that you would owe the insurance company (or have taken out of the settlement amount) is determined by the insurance company. There is no universal formula for the salvage value on a particular vehicle – it depends upon the car, the damage and its current worth.
In general, the salvage value is the amount of money the insurer would recoup when selling the vehicle through a licensed salvage vendor. So instead of selling it to a salvage vendor, they are allowing you to buy your car back, get the needed repairs and drive it again.
So, the buy-back amount (salvage value) is the worth of the car in the condition it is in with the damages it sustained in the accident. If you wish to buy back a car from an insurance company that deemed your vehicle a total loss, research the value of the car and the cost of buying it back.
You can check around with local salvage yards to make sure the salvage value the insurance company quoted you seems accurate for your vehicle.
Final thoughts: Buying back a totaled car
If you have Gap coverage (pays the difference between ACV and the balance on your loan) or new car replacement coverage (replaces your vehicle with a comparable one), you might want to avoid the hassle of dealing with a totaled vehicle and salvage title.
On the other hand, if you want to buy your totaled car back from the insurance company, ask yourself whether you’re willing to keep the car regardless of its resale value and the fact that you’ll only be able to insure it with liability coverage.
- Insurance Information Institute. “A Firm Foundation: How Insurance Supports the Economy.” Accessed August 2022.
- Statista. “Car insurance in the U.S. – statistics & facts.” Accessed August 2022.