If you’ve been in an accident and your car takes a serious beating, it may be deemed “totaled” by your insurance company. But what does it actually mean if your car is totaled, and what do you do about it?

Because you need the right insurance in place before you hit the road, we’re going to review important additional protections that really can make a big difference — like rental car reimbursement coverage. With it, when you’re wondering “is my car totaled?” after an accident, you’ll have some peace of mind knowing you can rent a car and get where you’re going.

The two types of insurance coverage you’ll want on your car insurance policy — to ensure your vehicle damage is insured — are collision and comprehensive coverage.

Here’s a detailed breakdown of when a car is considered totaled and what to do if your car is totaled, to help you get back on the road and keep your dreams moving forward.

When Is a Car Considered Totaled?

A car is considered to be a total loss when the overall cost of damages approaches or exceeds the value of the car. Most insurance companies determine a car to be totaled when the vehicle’s cost for repairs plus its salvage value equates to more than the actual cash value of the vehicle.

Exactly how to know if a car is totaled is a difficult task, because the salvage value after the loss is factored into the decision, and the vehicle’s salvage value, depends on the amount of damage done and other factors that are hard to assess offhand.

How does your insurance determine if your car is a total loss? Appraisers will estimate the cost of repairs, then determine if the cost to repair the vehicle — including things like cost of replacement parts, salvage value and labor fees — will equate to more than what the car is actually worth on the open market.

When your insurance totals your car, what value do they use? They’ll likely reference the vehicle’s actual cash value to determine the worth of the car when your vehicle is declared a total loss, but a lot more goes into it than just one factor. To better understand what constitutes a total loss, let’s take a closer look into how a total loss's value is calculated and then we'll get to the bottom of how much insurance pays for a totaled car.

If the Airbags Deployed, Is the Car Considered a Total Loss?

Not necessarily. Deployed airbags are not an immediate qualifier for a total loss. If, however, the cost of replacing the airbags is more than the value of your car, your vehicle will likely be a total loss.

Many wonder if airbags deploy, is a car totaled even if the damage is minor? A lot more goes into equating a total loss than just airbag deployment. As you’ll find, the answer to that all depends on the value of the car weighed against other costs, like the estimate of how much the car may go for at a salvage auction plus the complete cost of repairs, including towing, parts, labor and other auto-body expenses, like window replacement, paint and primer too.

If you have questions about airbag replacement after an accident, our friendly insurance agents (Opens in a new tab) are willing and able to help!

How Is Total Car Loss Value Calculated?

When you’re wondering, “How do I know if my car is totaled” after an accident, you'll need to become familiar with the following terms:

Actual cash value

A claims adjuster can calculate your car’s actual cash value. To do this, the adjuster evaluates things like your vehicle's condition and produces an estimate of its worth based on the make, model, year, mileage, and vehicle options.

Salvage value

Based on the entire value of the usable parts after the accident: tires, seats, doors, engine, electronics, etc. — anything that’s “salvageable” and has resale value. If the overall sum of those items comes to less than the actual cash value of the vehicle, then it’s considered totaled.

Cost of repair

So exactly what determines if your car is totaled? Typically, that answer is a few calculations away. The adjuster will estimate the cost of repairing your vehicle to see if it’s higher or lower than its actual cash value. If, after adding the salvage value cost to the total repair estimate, that figure is higher that the car’s actual cash value, the car is considered totaled in most cases. 

What Happens When Your Car Is Totaled and You Are Not At-fault?

In situations where an accident results in a total loss at the fault of another driver, the at-fault driver's insurance will usually pay you the value of your totaled vehicle.

But what happens when your car is totaled and there isn’t another driver at all? If your car is damaged beyond repair as a result of a falling object, like a tree dropping on it during a storm for example — and you have comprehensive coverage insurance — your insurer will likely pay you the cash value of your vehicle, minus the amount of your deductible.

Now, if you’re thinking, “What happens if my car is totaled and the fault is split between both drivers?” In cases like this, it’s best to check in with your claims representative to learn about how coverage and payouts will be managed. Exactly how much each insurance group pays for a totaled car when both drivers contributed to the accident depends on the amount of fault assigned to each driver, among other factors such as specific regulations in your state.

What Happens When an Insurance Company Totals a Car?

If you’re in an accident and your insurance company determines your car is totaled, here’s what happens next:

• Your claims adjuster will want to get your vehicle moved to a fee-free storage facility. They will probably ask you for any keys to the vehicle and will have you remove all personal items in it
• Once your vehicle is considered totaled, insurance will pay you a cash settlement, which is a check in the amount of the actual cash value on your vehicle, less any applicable deductibles
• If your vehicle is leased or has a loan on it, you will need to let your leasing group know that your insurance company will be contacting them
• If you still owe money to a lender on your vehicle, your claims adjuster will need to pay them. For example, suppose you owe $8,000 on your vehicle loan and your vehicle is worth $10,000. Your claims adjuster will issue $8,000 to your lender and the remaining $2,000 will be issued to you. If your vehicle is leased, the payment goes directly to the leasing company.

Of course, if you own your vehicle free and clear, you’ll get the full amount and can use it to purchase a replacement vehicle.

Do You Pay a Deductible When Your Car Is Totaled?

The short answer? Yes, you do. In order for your insurance company to pay out on the claim, they’ll subtract your deductible from the total payout. You’ll usually have to pay all of your deductible regardless of how much insurance pays for a totaled car. Do you pay a deductible if your car is totaled and you still owe thousands on the vehicle? Again, yes you do.

When buying a new car, most lenders will recommend that you pick up gap lease & loan coverage to help you manage your finances after the total loss of a new car. Does your deductible determine how much insurance pays for a totaled car? No, it doesn’t. But because it’s a cost you select when purchasing auto insurance, it can make a difference in the amount you receive for the claim. Most deductibles range from $500 - $2,000.

What does it mean if you have a $1,000 deductible? Your deductible is the amount you agree to pay out-of-pocket after a covered loss — in order to file a claim. Usually, they’re a set dollar amount. So, if you were in an accident that incurred $5,000 in damage, your insurance company would withhold the deductible of $1,000 and pay the remaining $4,000.

At American Family Insurance, we know mistakes happen, and want to help you out when we can. That’s why we’re offering diminishing deductible auto insurance — to help you take control of your insurance costs. After purchasing this additional coverage, you’ll pay less out-of-pocket towards your deductible for every accident-free year of driving, up to the policy’s limit. Be sure to reach out to your agent (Opens in a new tab) and inquire about adding this key coverage.

What Happens When Your Car Gets Totaled?

Usually, the insurance company will take ownership of your vehicle with a totaled car title transfer to their name. After that, they’ll likely sell it to a salvage buyer. If you decide to keep your car, the salvage value will be deducted from your settlement total. Some states have specific guidelines relating to owner-retained total losses, so be sure to check with your claims adjuster to fully understand what this entails.

How Much Does Insurance Pay for a Totaled Car?

Generally, your auto insurance will pay for the actual cash value of your car, minus your deductible, after it’s determined to be totaled. Once you’ve received your settlement, you can start the process of purchasing a new vehicle to replace your totaled one.

Can I Buy Back My Totaled Car?

Many insurers will allow you to buy back a vehicle that’s been “totaled out” if you want to repair it and make it roadworthy again. If you’re wondering “how do I buy back my totaled car?” you’re best to get in contact with your claims representative. But you should be aware that you may have to pay out of pocket to cover the cost.

Minus your deductible, you’ll be given the actual cash value of the vehicle, but if you still owe money on the loan, you may need to pay the balance in order to get the title transferred over to you from your lender.

If My Car Is Totaled, Do I Have to Pay Off the Loan?

Okay, you’ve accepted that your car is a total loss. But what if there’s still a loan on the vehicle? Are you responsible for paying the balance?

What happens when a car is totaled with a loan is — typically — your insurance company or the at-fault driver’s insurance company will cut a check for your car’s actual cash value less any applicable deductibles. Let’s suppose you owe $10,000 on your auto loan and your car is valued at $12,000. Your claims adjuster will pay $10,000 to the lender and the remaining $2,000 will be issued to you.

How Does Gap Insurance Work After a Car Is Totaled?

Keep in mind, there is such a thing as still owing money to your lender after you receive payment from the insurance company. Why? Because the insurer is only obligated to pay you for the fair market value of your car, and sometimes when you’re financing a car, you’ll owe more money on it than it’s actually worth. This is called being upside-down, and it’s why you should have auto lease or loan gap coverage.

Gap coverage is an additional auto coverage you can add to your auto policy so, in the event you’re upside-down when your car is totaled, it’ll help pay for the gap between what your car is worth and what you still owe to your lender, subject to any applicable coverage limits. At American Family Insurance, the maximum payout for gap coverage is equal to 25 percent of your vehicle’s actual cash value. So, if your car’s ACV is $4,000, you’ll have an extra $1,000 in gap coverage with this added protection in place.

Another important detail about this coverage is that the loan must be a vehicle loan and be taken out only to purchase the vehicle. So, if you used a home equity loan to purchase a vehicle, this coverage would not be available. Additionally, it doesn’t pay for items such as extended warranties, credit life insurance, loan rollover balances or late payment penalties and fees.

Stay Protected with Car Insurance

Having a totaled car isn’t a fun situation to deal with, but knowing what comes next can help reduce some of the stress. To better protect your savings, be sure to explore additional coverages that really can make a big difference:

• Lease/loan gap coverage — Required on most financed or leased cars, this added coverage helps pay for the difference between what’s owed on the car and its actual value, in the event of a total loss
• Rental car reimbursement coverage — Can reimburse rental car expenses when your vehicle is undrivable due to a covered loss

Connect with your American Family Insurance agent (Opens in a new tab) to find out just the right auto insurance coverages to protect you from the unexpected.

This article is for informational purposes only and includes information widely available through different sources.