What to Do if Your Car Is Totaled in an Accident

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A totaled car is a damaged vehicle that would cost more to repair than its value. Insurance companies decide if vehicles are totaled based on their own calculations, which are usually based on a percentage of the vehicle's value.

Not every totaled vehicle looks the same. An older vehicle that isn't worth a lot might not appear to have much damage, but the repairs would cost more than the vehicle's value. On the other hand, a new luxury vehicle that's worth a lot might have severe, catastrophic damage that looks like a total loss but isn't. 

Determining factors for a totaled car

States set basic guidelines for totaled cars, but individual insurance carriers can have more stringent guidelines. The calculation is based on the market value of your vehicle just before the accident and the total repair costs. Factors such as the vehicle's age, condition and mileage factor into determining the value. 

In some cases, the insurance company declares the vehicle a total loss if the repairs are a bit lower but close to the value of the vehicle. 

Insurance coverage

Depending on your insurance coverage and the coverage of the at-fault party, you could receive compensation for your totaled vehicle. 

Types of insurance coverage
When you insure a vehicle, you can choose liability coverage only, which covers other drivers' vehicles, property and injuries if you cause an accident. You can also add collision and comprehensive coverage. Those coverages pay to fix your vehicle if you're at fault for an accident. 

Whether you receive compensation for a totaled vehicle depends on who's at fault and what type of insurance you have. For instance, if you're at fault and only have liability insurance, you won't receive a payout for your vehicle's value. However, if someone else is at fault and has liability coverage, that person's insurance should pay for it. 

Collision vs. comprehensive coverage
When you total your vehicle after colliding with something else, your collision coverage pays. It kicks in if you collide with another vehicle, a tree, a fence or other object in or near the road. You receive the value of the totaled vehicle minus the collision deductible amount on your policy.

Comprehensive coverage goes into effect for other damage to your vehicle, often caused by events outside your control. Examples include damage due to vandalism, fire, theft, falling objects or weather. 

Property damage liability coverage
If someone else is at fault for the accident, that driver's property damage liability coverage pays for the damages to your totaled vehicle. Most states require minimum liability coverage, but some drivers still go without it.

When the person at fault doesn't have liability insurance, you can submit a claim to your insurance provider. If you have collision coverage on your vehicle, you may receive compensation for the car's value under your policy. Your uninsured or underinsured motorist liability coverage may also cover your vehicle repairs up to the coverage limit. 

After an accident

First and foremost, make sure you and everyone involved in the accident is safe. Seek medical attention if necessary before worrying about your vehicle. Then start working with your insurance company to figure out your options. 

Report the accident to your insurance company
Call your insurance company as soon as possible after the accident to file a claim. You may need to file a police report as well. Each state sets time frames for reporting accidents. Your safest bet is to report the accident as soon as possible after dealing with any injuries. 

Determining fault and filing a claim
Your insurance company then takes over the investigation. It looks at the evidence to determine who was at fault. If it was another party, your insurer works with the other party's insurance company to determine who pays for the damage. 

You can help by sharing any information you have. For instance, if you took photos at the scene or have contact information for eyewitnesses, your insurance provider can use this information to find out if another driver was at fault.

Contacting an insurance adjuster
An insurance adjuster determines if the insurance company should pay for the damage and how much it should pay. Once you file your insurance claim, you should hear from the insurance adjuster who's assigned to your case. Work with the adjuster to determine if the vehicle is totaled and what to do next.

Assessing the damage
Insurance adjusters investigate the circumstances of the accident and inspect the vehicle to estimate the cost of repairs. From there, the adjuster determines if the vehicle is a total loss, and if it is, offers you the value of the vehicle based on the calculations. 

You can negotiate with the insurance company if you think its assessment is incorrect. For example, if you think the value is significantly higher and the vehicle shouldn't be totaled, contact the insurance company and provide your evidence. The adjuster might not change his or her mind, but it's worth a shot if you believe your car is worth more. 

Repair costs and fair market value

When determining if a vehicle is totaled, the insurance company looks at the repair costs and the fair market value. A comparison of those numbers helps determine whether fixing the vehicle is worthwhile. 

Cost of repair vs. fair market value
Insurance companies use the fair market value, or book value, of your vehicle right before the accident to determine if it's totaled. They compare the vehicle's value to the cost of repairing the vehicle's damage from the accident. If the repair costs exceed a predetermined percentage of the car's value, the insurance company totals the vehicle.

When that happens, you receive the cash value of the vehicle from the insurance company. You can negotiate this amount with the company, but be prepared to show evidence of why you think it's worth more. 

What if repair costs exceed the vehicle's value?
What do you do if the repair costs are higher than the vehicle's value? That depends on your situation.

If the vehicle is financed, the insurance company sends the money to the lender to cover the loan. If you still owe money on the loan, you're responsible for covering the difference. One way to mitigate this situation is by getting gap insurance when you buy a new vehicle. If your vehicle is totaled, the gap insurance covers the difference between the value and the loan balance.

However, you can't buy gap insurance after an accident. In that case, you have to pay off the loan or continue making payments on a vehicle that's totaled. Your lender might work with you on this arrangement. 

You can choose to make the repairs yourself if the insurance company totals the vehicle. You have to cover the additional repair costs beyond what you receive from the insurance company. Consider the severity of the damage and how much extra you'd have to pay before choosing this route.