Total Loss Car Insurance: What Happens When Your Car Is Totaled?

A car is totaled when repair costs exceed your state's damage threshold, usually 70-75% of the vehicle's actual cash value. Learn what happens to your payout and how the total loss process works.

Find out if you're overpaying for car insurance below.

Written by Mark Fitzpatrick

Updated: February 8, 2026

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Key Takeaways: What to Know About Total Losses

A car is totaled when repair costs exceed your state's damage threshold. This is usually 70-75% of the car's actual cash value, though thresholds range from 60% to 100%.

Your payout equals your car's actual cash value minus your deductible. If you owe more than the settlement, you're responsible for the difference unless you have gap insurance.

Collision coverage pays for accident-related total loss, while comprehensive coverage pays for theft, fire, natural disasters and vandalism.

When Is a Car Considered Totaled?

A car is declared a "total loss" (or "totaled") when your insurance company determines repair costs exceed a percentage of the vehicle's pre-damage value. Your insurer pays you the car's actual cash value minus your deductible, then takes ownership of the vehicle.

Actual cash value (ACV) represents what your car was worth immediately before the damage occurred, based on its age, mileage, condition and comparable vehicles in your area. This differs from replacement cost (what you paid) or trade-in value.

Here's what's counterintuitive: a totaled car doesn't have to be destroyed or undrivable. Many totaled vehicles still run and could technically be repaired. The "total loss" designation is purely economic — your insurer has decided paying for repairs doesn't make financial sense compared to the car's current market value.

EXAMPLE OF A TOTAL LOSS

If your car is worth $10,000 and repairs would cost $8,500, your insurer may declare it totaled. You'd receive $10,000 minus your deductible. The exact decision depends on your state's damage threshold, which we'll cover more below.

How Total Loss Thresholds Work

Your state determines the damage percentage required before insurers must declare your car totaled. Most states require repair costs to reach 70-75% of your car's actual cash value before it's totaled, but thresholds range from 60% to 100% depending on where you live.

States use two different methods: percentage thresholds or total loss formulas.

These states mandate a specific percentage of your car's actual cash value. When repair costs exceed that percentage of what your car is worth, insurers must declare total loss.
$15,000
75%
$11,250 or more
Totaled
$8,000
70%
$5,600 or more
Totaled
$20,000
100% (Texas)
Must equal $20,000
Totaled only at full value
The same damage can have different outcomes depending on your state's threshold. In a 75% threshold state, $11,250 in repairs on a $15,000 car means a total loss. In Texas, which has a 100% threshold, that same car would be repaired.
These states allow insurers to use a different calculation: Repair Cost + Salvage Value ≥ Actual Cash Value. If true, the vehicle is totaled even if repairs alone are below 100% of ACV.

For example, your car is worth $12,000 and needs $9,000 in repairs. The salvage value is $3,500.
- Calculation: $9,000 + $3,500 = $12,500
- Result: Totaled because $12,500 ≥ $12,000
In TLF states like California and Arizona, your car can be totaled even when repair costs are only 75% of its value. The salvage value pushes the total over the threshold.


$15,000	75%	$11,250 or more	Totaled
$8,000	70%	$5,600 or more	Totaled
$20,000	100% (Texas)	Must equal $20,000	Totaled only at full value

Check your state's specific threshold to understand when your car will be totaled.


Alabama	75%
Alaska	TLF
Arizona	TLF
Arkansas	70%
California	TLF
Colorado	100%
Connecticut	TLF
Delaware	TLF
District of Columbia	75%
Florida	80%
Georgia	TLF
Hawaii	TLF
Idaho	TLF
Illinois	TLF
Indiana	70%
Iowa	70%
Kansas	75%
Kentucky	75%
Louisiana	75%
Maine	TLF
Maryland	75%
Massachusetts	TLF
Michigan	75%
Minnesota	80%
Mississippi	TLF
Missouri	80%
Montana	TLF
Nebraska	75%
Nevada	65%
New Hampshire	75%
New Jersey	TLF
New Mexico	TLF
New York	75%
North Carolina	75%
North Dakota	75%
Ohio	TLF
Oklahoma	60%
Oregon	80%
Pennsylvania	TLF
Rhode Island	TLF
South Carolina	75%
South Dakota	TLF
Tennessee	75%
Texas	100%
Utah	TLF
Vermont	TLF
Virginia	75%
Washington	TLF
West Virginia	75%
Wisconsin	70%
Wyoming	75%

What Events Can Lead to a Total Loss?

Your car can be totaled by accidents that cause severe damage, theft, natural disasters, fire or vandalism. The specific cause determines which coverage applies: collision or comprehensive.

Collision Coverage

Collision coverage pays for total loss when your car is damaged in an accident and repair costs exceed your state's threshold.

Accidents you cause

Single-car crashes or multi-vehicle accidents where you're at fault can total your vehicle if damage is severe enough.

Single-vehicle crashes

Hitting a tree, rolling over, driving into a ditch or striking a guardrail can cause extensive damage that exceeds your state's threshold.

Uninsured driver accidents

Collisions where the other driver causes the accident but lacks insurance or adequate coverage require your collision coverage to pay for your total loss.

Comprehensive Coverage

Comprehensive coverage pays for total loss when your car is damaged by events other than collisions.

Theft (not recovered)

If your car is stolen and not recovered within 30 days (timeframe varies by state), your insurer declares it totaled and pays your claim based on pre-theft value.

Fire damage

Whether from accident, electrical failure or arson, fire damage often totals vehicles due to extensive structural and mechanical destruction.

Natural disasters

Floods, hurricanes, hail, wildfires or earthquakes can total your car. Flood damage is especially common because water compromises electrical systems, engines and interiors.

Vandalism

Extensive intentional damage, such as slashed tires, broken windows and interior destruction, can result in total loss if cumulative repair costs exceed the threshold.

Falling objects

Trees, branches or debris causing severe structural damage may total your vehicle if multiple systems are affected simultaneously.

Animal collisions

Hitting a deer or other animal is covered under comprehensive, not collision. Severe animal strikes can total your car if damage to the frame, engine or multiple systems exceeds the threshold.

What Happens After Your Car Is Totaled?

Once your car is declared a total loss, your insurer follows a specific process to assess damage, determine value and settle your claim. Most insurers settle within two to four weeks from damage assessment to settlement.

1
Damage assessment and value calculation
An insurance adjuster inspects your vehicle and estimates repair costs. The insurer then determines your car's ACV by researching comparable vehicles in your area. If repair costs exceed your state's threshold, the insurer declares it totaled.
2
Settlement offer
You receive your payout: your car's ACV minus your deductible. If you're not at fault, you can file with the at-fault driver's insurance to receive the full ACV without paying your deductible.
3
Remove personal belongings
You have seven to 14 days to retrieve items, custom parts and accessories before the vehicle is transported to salvage.
4
Complete paperwork and administrative tasks
Sign over your car's title to accept the settlement. The insurer sells it at salvage auction, or you can keep it through owner-retained salvage for a reduced payout. Cancel collision and comprehensive coverage on the totaled vehicle but keep liability coverage until title transfer completes. Return license plates to the DMV if required in your state and cancel registration.
5
Pay off your loan
If you owe more than the settlement, pay the difference to your lender. Gap insurance covers this if you have it.

GAP INSURANCE COVERS THE DIFFERENCE

If you owe more on your car loan than your insurer's settlement amount, you're responsible for paying the difference. Gap insurance covers this, paying the difference between your car's actual cash value and your outstanding loan balance. This coverage is valuable for financed and leased vehicles, especially during the first few years when cars depreciate faster than loan balances decrease.

Actual Total Loss in Insurance: Bottom Line

Losing your car to a total loss is stressful, but the process follows predictable steps. Your insurer pays your car's actual cash value minus your deductible once repairs exceed your state's threshold, usually within two to four weeks. Understanding whether you need collision or comprehensive coverage, and whether gap insurance protects you, helps you file claims confidently and replace your vehicle.

Total Loss of a Vehicle: FAQ

What will insurance pay for a totaled car?

Your insurer pays your car's actual cash value minus your deductible. ACV represents what your car was worth immediately before the damage, based on its age, mileage, condition and comparable vehicles in your area. If you weren't at fault, you can file with the at-fault driver's insurance to receive the full ACV without paying your deductible.

Can you negotiate total loss payout?

Yes. If you believe the insurer's ACV is too low, provide evidence of higher value: recent comparable vehicle listings, maintenance records, receipts for upgrades or an independent appraisal. Insurers often adjust offers with compelling evidence.

Can I keep my car if it's declared a total loss?

Yes, through owner-retained salvage. You keep the car and receive a reduced payout (your car's ACV minus salvage value and your deductible). You'll need to repair it and may need a salvage title inspection before registering it again.

What if I disagree with the total loss decision?

You can challenge the decision by getting an independent appraisal or repair estimate. If your evidence shows repair costs fall below your state's threshold, the insurer may reconsider. You can also file a complaint with your state's insurance department.

Does a total loss claim raise my insurance rates?

It depends on fault. If you caused the accident, your rates will likely increase. If you weren't at fault or your car was totaled by theft, weather or vandalism, your rates typically won't change. Rate increases vary by insurer and state.

How long does it take to receive a total loss payout?

Most insurers settle within two to four weeks from the initial damage assessment. The timeline depends on how quickly you provide documentation, whether you negotiate the settlement and your state's claims processing requirements.

Will my insurance cover a rental car after my car is totaled?

Only if you have rental reimbursement coverage. This coverage typically pays for a rental car for a limited time (usually 30 days) after your car is totaled, giving you time to find a replacement vehicle.

Actual Total Loss in Car Insurance: Our Methodology

We analyzed total loss regulations from state Departments of Insurance and settlement practices from major insurers including GEICO, State Farm, Progressive, Allstate and USAA. Total loss threshold data was compiled from state insurance codes and verified through insurance department resources.

Learn more about MoneyGeek's methodology.

Car Insurance Total Loss: Related Pages

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. He has analyzed the insurance market for over five years, conducting original research for insurance shoppers. His insights have been featured in CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

He writes about economics and insurance, breaking down complex topics so people know what they're buying.

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