What happens if your car is a total loss?

A car accident can leave you with more questions than answers—both personally and financially. If your car results in a total loss, you can expect to work with your car insurance company on next steps, including deciding whether or not you’ll keep the vehicle. 

Whether you recently had a total loss or are making plans for a "just in case" scenario, it's good to know how the car insurance process plays out. That's why we've asked our insurance and claims teams to share with you information about totaled vehicles.

What is considered a total loss?

When you think of a totaled car, you might be thinking of a vehicle that looks unrecognizable after an accident. 

Unfortunately, there’s no universal definition of a “total loss”—it all comes down to where you live. Every state sets its own definition and criteria of what constitutes a total loss, which car insurance companies are required to follow. In general, when a damaged vehicle is more expensive to repair than it is to replace, it could be considered a total loss.

Your car insurance policy and a totaled car

A totaled car is one scenario where you can be grateful you had the right car insurance coverages.Because after an accident, you may wish you had a time machine and could go back to make sure you selected the right coverages to help protect you and your car. 

Which coverages can help in scenarios of a totaled car? Here are three that come to mind: 

1. Collision 

As the name suggests, Collision coverage on an insurance policy is there to help for losses that are caused by

hitting or being hit by another car as well as hitting an inanimate object like a tree, house or pole. 

2. Comprehensive

Comprehensive is a type of coverage that helps protect you from damage during an incident that does not involve a collision (being hit by or crashing into another vehicle). Some incidents could be an accident with an animal, a flooded car or fire. 

3. Rental 

Rental coverage is also another helpful add-on to your car insurance policy that can provide some assistance to you, in the event your car is deemed a total loss. This coverage can put you back in a vehicle for a period of time while your totalled car is being handled. Every car insurer will have different requirements and uses for this coverage, so it’s a good idea to double check with them to see which situations would apply for Rental coverage.

With these (and other) car insurance coverages, you could feel a little more prepared to handle the process of a totaled car.

What happens after a car is totaled?

In more cases than not, your car is likely going to be in a less than ideal condition after a car accident. Whether that car damage is visible or not, your car insurance company will help play a key role in determining a total loss and what steps you can take afterwards. 

In most cases you’ll file a claim with your insurer, which will begin the process of evaluating damages. If your vehicle is deemed a total loss, here is an example of the process: 

Step 1: Determine who has the car title

Do you have the title of the car? If you own the car but don’t have the title, you may need to request a duplicate title from the DMV. Or, does your lender have the title? If your car is financed or leased, you’ll provide your insurance company with loan information (lender name, account information, etc).

It’s also important to know that all owners who are on the title are required to sign the paperwork with your insurance company, once the title is received. 

Step 2: Chat with your car insurance company

As you go through the claims process, you’ll already be chatting closely with your car insurance company’s claims team. Before the car is deemed a total loss, an estimate of the damages, including the cost to repair will be completed. Your car insurance company will review the pre-damage value of your vehicle and compare it to the damage estimate to determine if the vehicle is a total loss. 

Step 3: To keep, or not to keep…that is the question

With the value in hand, you’ll make the personal decision as to whether or not you’ll keep the car that has been deemed a total loss. It’s a personal decision because you may decide you want to cut your losses and start fresh with a new car

or you might want to keep it, fix it yourself or sell it for parts on your own. 

• If you keep the car

Our friends in claims let us know that it's not a common occurrence for someone to be able to keep their totaled car, but it does happen. If you have the option and decide to keep your car, there are a few things you’ll want to know. 

First, your car insurance may require you to remove physical damage coverages for this car (Collision and Comprehensive) from your car insurance policy. This is because most insurers won’t pay out for a car that has been deemed a total loss, should it experience damage again. In fact, there are some insurance companies that won’t insure a total loss vehicle—even if it's drivable. 

Second, if you do decide to keep the vehicle, your insurance company could deduct your deductible and the salvage value (this is the amount your car insurer could sell the damaged car for) from the value of the car before it was damaged. Here’s an example:

Third and final note—if you do decide to keep the car, your state will also require you to go through the necessary paperwork to change the title type, which generally falls under a salvage or rebuilt title.

• If you don’t keep the car

If you opt out of keeping the totaled car, the process is fairly straightforward. Once the car is deemed a total loss, your car insurance company will ask you to remove all personal belongings from the vehicle and give permission to your insurer to pick up the vehicle. 

Afterwards, you’ll discuss the settlement with your car insurer. This amount is typically the value of the car prior to the damage, minus your deductible. Here’s an example: 

There’s a caveat to this settlement number. If you have a lien (a financed car), your insurer will contact your lender and pay the settlement to them. If you end up owing more than what the vehicle is worth, you’ll need to work with your lender to work out the remaining debt. If the settlement is more than what you owe, the remaining funds will go directly to you. 

It’s important to remember that before you see any payment or settlement, you will be asked to sign all required paperwork. Once the paperwork is completed, your car insurance company will become the owner of the vehicle and typically sell it for salvage. 

Step 4: Rental cars and coverages

When it comes to rental car options or how your Rental coverage applies after a total loss, it’s important to speak with your insurance company. Every state is different and the number of days your rental car is covered for may be limited after a settlement offer has been made.

It’s also important to contact your insurer’s customer care to discuss your insurance policy to cancel your policy or make changes to your coverages. And if you decide to replace the vehicle with your settlement, you’ll need to implement a new policy on the new car. 

Final thoughts on total losses and insurance

The news of a total loss is never what you want to hear after an accident. But with the right information, you can make an informed decision that allows you to get back on the road and behind the wheel safely. 

And as always, if you ever have questions that come up during the claims process or after a totaled car, reach out to your adjustor. If you have questions about your policy, reach out to your car insurance customer care team. They’re there to help you during times when you need them the most—so don’t hesitate. Every question is a good question in our opinion and at HiRoad, we’re here to answer them all. 

The information in this article was obtained from various sources not associated with HiRoad®. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. HiRoad is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. HiRoad makes no guarantees of results from use of this information.