What Happens When Your Car Is Totaled?

Last Updated on April 19, 2021

Being involved in an automobile accident is very stressful and can be life-changing. To find out your car is totaled is even more stressful. This stress comes from dealing with the insurance agency and knowing what to do to get another vehicle. You need to know what questions to ask and realistically understand the situation.

What Is a Totaled Car?

What Happens When Your Car Is Totaled?In general, a car is considered totaled when the cost to repair the vehicle is greater than the car’s monetary value. Some states, however, have specific thresholds before considering a car as totaled.

In New York, an insurer must legally declare your car a total loss if the damage totals 75% or more of its value. For example, if a vehicle is worth $5,000, and the repair estimate is $4,000, the car will be considered totaled.

There is another reason why a car may be considered as a totaled car. If the vehicle cannot be repaired safely, insurers may total your car.

Deployed Air Bags

Many policyholders have a common misconception that their car is a total loss if their airbags deploy, which isn’t always the case. Repairing the airbags is one of the costs that is figured into the repair estimate. If repairing your vehicle exceeds the value of your car, it will be considered a total loss.

Determining if Your Car is Totaled

After an accident occurs and a police report is taken, a claims adjuster will be sent out by your insurance company to determine if your car is totaled.

The claims adjuster will take notes about the mileage on your car, the body’s condition, interior, tires, and any other damage or parts of your vehicle.

Actual Cash Value

The adjuster will research cars in your area comparable to your vehicle before the accident to find your vehicle’s actual cash value. In New York, you can also collect the cost of sales tax, title, and registration to be added to your car’s cash value.

Visit with your adjuster to ensure you are getting a fair deal, especially if you have aftermarket gear in your car. Explain to the adjuster why you think your vehicle is worth more or find a vehicle for sale that’s a better match for your vehicle. This will help increase the actual cash value of your car.


Some insurance requires policyholders to get an estimate for repairs before they total a vehicle. Once the estimate is given to the insurance company, they will determine if the car is totaled. Remember, New York says the repairs must cost 75% of the car’s actual value.

Insurance Pay Out

Depending on your insurance coverage, it may be time for the insurance agency to payout. Once the insurance company decides your car is a total loss, they should issue you a check for the actual cash value of the vehicle minus your deductible. So if it is determined that your car’s actual cash value was $4,500 and your deductible is $500, you should receive a check for $4,000.

Ask your insurance agent when you will receive your payment and if your insurance covers a rental car while you wait. Most insurance companies send out the payment within a few days of finalizing the actual cash value.

What if You Owe Money On Your Totaled Car?

Insurance companies are not obligated to pay off your car loan. If your car is being financed at the time of the accident, more than likely, your insurance company will issue your payout check to both you and the finance company.

At this point, you must contact the finance company to figure out the next step. If you owe more on your vehicle than what the insurance company paid, you still owe the finance company the difference.

GAP Insurance

When you purchased your vehicle, you were probably offered GAP insurance. GAP insurance is Guaranteed Asset Protection. If you have GAP insurance, this is where it kicks in. Your GAP insurance should cover the rest of your car loan.

GAP insurance’s downfall is that although they pay off the rest of your loan, they give nothing extra for a down payment for a new vehicle. You must come up with a down payment for a new car on your own.

Purchasing a new vehicle is the final step that happens when you total your car.

Types of Insurance

Not all types of insurance cover the replacement of a total loss vehicle. If you have liability-only insurance, there is a good chance you will have to pay out of pocket to buy a new car.

If you have comprehensive coverage and collision coverage, the insurance may help you with a replacement vehicle. Comprehensive insurance will cover damage to your car caused by disasters not related to a collision. For example, if a tree falls on your car and totals it, your comprehensive coverage will cover it.

Collision insurance covers damage to your vehicle caused by colliding into another car, object, or property. If you have this type of insurance, a total loss should be covered.

Denied Claims

Sometimes, insurance companies may deny claims for a total loss. The first reason is that you don’t have comprehensive or collision coverage. You might also be rejected for a total loss claim because you have not kept up with your premium payments.

Suppose you were driving while intoxicated your claim will be denied. Another reason your claim might be rejected is that you filed a fraudulent claim. Finally, if you take too long to report the damage, your claim may be denied.

A Final Word on Totaled Cars

Your insurance premiums could increase as low as a 3% increase to as much as a 110% increase if you are at fault. Once your premiums hike, it will be challenging to get the lowered again. If you are looking for a new insurance company after a total loss and need help, let us help you. Scroll to the top of the page to get started.

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