How to keep your totaled car

Crashed your car? Bummer. Even worse is getting a call from your car insurance company saying it’s a total loss and should go to the junkyard.

When your car is totaled, you don’t have to accept the insurance payout right away — keeping your car is often an overlooked option. Whether it’s for sentimental reasons, potential repairs, or salvaging parts, there are benefits to holding onto a totaled vehicle.

However, this choice comes with considerations like repair costs, safety, insurance impact, and legal requirements. While the insurance payout can help you buy a new car, keeping your totaled vehicle might offer unique advantages, especially if you’re handy or can use its parts.

In this guide, we’ll cover everything you need to know to make an informed decision about whether to keep your totaled car.

What is a car considered totaled?

When a car is totaled, it usually means the damage is either too expensive to fix or the car isn’t safe to drive. Insurers base this decision on the car’s actual cash value (ACV), which is how much your car was worth before the accident.

Each state and insurance company has its own rules for when a car is considered a total loss — often when repair costs reach 60% to 80% of the car’s value. Insurance companies use tools like Kelley Blue Book, J.D. Power, and local sales data to determine your car’s worth.

Older cars are more likely to be totaled because they’re worth less, so even moderate damage can push repair costs over the limit. If you disagree with the insurance company’s value, you can provide records, photos, and recent listings to try and get a better payout.

Total loss formula (TLF): How insurers determine if a car is totaled 

Insurance companies use a total loss formula (TLF) to determine whether or not a vehicle is totaled after an accident. 

Here’s the formula: Total loss = Cost of repairs + Salvage value of vehicle > Actual cash value of vehicle

In other words, the vehicle is considered a total loss if the combined total of the repair costs and the salvage value is more than its actual cash value (ACV). 

While this is the general formula, insurance company rules and state laws can impact the decision to total a vehicle or not. Typically, once damage exceeds a certain amount, a vehicle becomes subject to that state’s salvage title laws. These laws may have a specific total loss threshold or ratio that is a percentage of the vehicle’s market value. Or they could require the use of a total loss formula.

For instance, let’s say your vehicle is worth $8,000. It requires $6,000 worth of repairs and has a salvage value of $2,500 in its current condition. The total of the repairs and salvage value ($8,500) is greater than the actual cash value ($8,000), so it would be deemed a total loss under this formula.

How to keep your car if your insurer says it’s totaled

If you accept the insurer’s decision to total your car but still want to keep it, your insurer will pay you the actual cash value minus its salvage value and any deductible. It will then be up to you to repair the car.

They will cut you a check, and then you’re on your own.

If you choose to repair the vehicle yourself — using the insurance payout to help — you’ll likely need to shop for a new insurance provider. While it’s possible to insure a previously totaled car, you may face higher premiums, and many insurers are hesitant to offer comprehensive or collision coverage for vehicles with a salvage or rebuilt title.

Total loss laws by state

States are split in how they approach total loss laws. Under half use the total loss formula (TLF) to determine if a vehicle is subject to salvage title laws. The rest have a percentage threshold. These percentages range from 60% in Oklahoma to 100% in Colorado and Texas. 

Once the cost of repairs exceeds that percentage of a car’s value, the vehicle is considered a total loss.

Total loss thresholds for each state

Pros and cons of keeping your totaled vehicle

Before you decide to hold onto your totaled vehicle, be sure to weigh the pros and cons.

Pros:

• The damage may be mainly cosmetic, and you may be able to negotiate an insurance settlement to keep the vehicle.
• It may be possible to repair the car with the insurance payout.
• If the vehicle is not repairable, you can potentially earn more money by selling it yourself.

Cons:

• The repairs could cost more than initially estimated.
• You will likely need a salvage title, making selling or insuring the vehicle difficult.
• Keeping and disposing of a totaled car yourself can be more complex and time-consuming than handing it over to an insurer.

What are my car insurance coverage options for a totaled car?

Even if your previous insurer deemed the vehicle a total loss, you’ll still need to secure a new policy to drive it again, which may be difficult legally. 

Getting insurance for a totaled — or salvaged — vehicle isn’t easy. Some insurers won’t cover cars with a branded title, which indicates the vehicle was declared a total loss. Even if you do find coverage, options like collision and comprehensive may be limited or come with higher premiums. Coverage availability varies by company, so it’s important to check before committing to repairs.

Keep in mind that once a car has been totaled, it’s entered into the National Motor Vehicle Title Information System (NMVTIS), a federal database that tracks total-loss vehicles. This record can make it harder to resell the car, as potential buyers will see its salvage history.

If you plan to keep and insure a totaled vehicle, it’s worth exploring what types of coverage are still available.

Recommended car insurance coverage options for a totaled car

What optional car insurance coverages cover a totaled car?

To receive a payout for a totaled car, you’ll need the right insurance in place. While most of these coverages aren’t legally required (with one key exception), they can make a big difference if your car is declared a total loss.

• Collision and comprehensive insurance. Collision coverage will pay for damages when your vehicle collides with another vehicle or object. Comprehensive insurance will cover other losses, such as collisions with animals, vandalism, or storm damage.
• Gap insurance. Since cars depreciate quickly, you may find that the actual cash value of your car is less than what you owe on your vehicle. If your car is a total loss, gap insurance will cover the difference between what the insurance company pays and what you owe on your auto loan.
• New car replacement insurance. If you buy a new car and total it within a certain amount of time – usually no more than five years – your insurer will pay for a new car of the latest make and model if you have this optional coverage.
• Rental reimbursement auto insurance. You may need to rent a vehicle while waiting to replace your totaled car. However, your auto insurance policy won’t likely cover the expense unless you have opted into rental reimbursement coverage.
• Uninsured motorist coverage. Some states require uninsured motorist coverage, and this insurance will pay for damage to your vehicle should the at-fault driver be uninsured.  

Step-by-step guide to getting your total loss check

After an incident, here’s how to get your total loss check. 

• File a claim. Start by reporting the incident to your insurance company. Be ready to share detailed information about the accident and your vehicle.
• Get an inspection. Your insurer will arrange for an adjuster to inspect the damage at your home, a repair shop, or another location.
• Wait for the assessment. If the insurer determines your car is a total loss, they’ll notify you and explain the next steps.
• Review the settlement offer. You’ll receive a payout offer based on your car’s actual cash value. Take time to review it and ask questions if anything is unclear.
• Sign over the title. If you accept the offer and don’t plan to keep the vehicle, you’ll sign paperwork transferring ownership to the insurance company.
• Receive your check. The settlement check may take up to 30 days to arrive. If there are delays, follow up weekly to stay informed.

If you disagree with the insurance company’s valuation of your vehicle, you can appeal their decision. To support an appeal, you’ll need to provide substantial documentation. 

“If you feel that your vehicle is worth more than their assigned figure, it is up to you as the consumer to provide proof of maintenance and any enhancements that increase the value,” says Ben Komenkul, a travel expert at Carfax and Metromile. 

Who gets the insurance check: You or the bank?

The delivery of the check varies based on your situation. Drivers who own their vehicle outright can expect to receive the check directly. 

Drivers who leased or financed the vehicle might receive the check, but it could also head straight to the lender. Either way, once you receive a settlement check for a vehicle on which you have a loan balance, you’ll need to use the funds to pay down the loan. 

If you aren’t sure where the funds will go, ask the insurer during the claims process for more information. 

What to do when your car is totaled and you still owe money 

If your vehicle is totaled and you still owe money on the loan, the insurer will reimburse your lender for the car’s worth (the actual cash value). Then, you must pay off any remaining balance if that amount is less than what you owe.

If you have gap insurance, it will compensate for the difference between what the vehicle is worth and what remains on your loan. Otherwise, you must keep making payments until the loan balance becomes zero.  

Stories from drivers who totaled their cars

Let’s see how this works in two different real-life scenarios.

Madeline is a driver in Michigan who had full coverage on an older Toyota Camry. As she was driving, a vehicle did not see her and attempted to turn left into her lane. It hit her vehicle and crumpled the car’s front end, dislodging the bumper. No one was injured in the accident, but Madeline’s vehicle had to be towed.

An insurance adjuster inspected the vehicle and determined that the damage, worth $3,500, was a total loss. Madeline had a $1,000 deductible on her policy, but she was able to provide a police report indicating she was not at fault for the accident, and her insurer waived the deductible.

Ruth wasn’t so fortunate, though. A North Carolina resident, she had opted to purchase only the minimum liability and uninsured motorist coverage required by her state. Her Ford Explorer was older, and she had never been in an accident, so she felt confident forgoing the additional coverage.

One evening, she became distracted, crossed over the centerline on the road, and then overcorrected when she realized her mistake. The overcorrection took her off the road and flipped her vehicle into the ditch. Ruth was able to walk from the accident without any injuries, but her vehicle was a total loss. Unfortunately, she did not have collision coverage, so she received no payment from her insurance company.

Here’s a recap of each situation: