Can an insurance company force you to total your car?


Your insurance company may declare your car a total loss after an accident, but you have the option of keeping the car if you choose.

Anna Swartz 1600

Published June 11, 2019

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  • Your insurance company will generally declare your car a total loss if the cost to repair it exceeds a certain percentage of the car’s value

  • You can dispute a total loss settlement, but you’ll need lots of evidence to back up your dispute

  • Usually, a totaled car goes to a salvage yard, but you can choose to keep your vehicle

If your car is severely damaged in an accident, your insurance may declare it a total loss. This usually happens when the damage to the car would cost more to fix than the car is actually worth. If you have comprehensive and collision coverage as part of your car insurance policy, a total loss will be covered, and you’ll be paid the actual cash value (ACV) of the vehicle.

If you want to dispute your car insurance company’s valuation of your car after an accident, you’ll need lots of evidence proving your car is worth more than what your insurer determined. This can involve negotiating with the insurer, hiring your own appraiser and going through a lawyer.

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What does it mean when a car is totaled?

Generally, a car is considered to be a total loss when it would cost more to fix it than it was worth just before the damage. After you file a claim, your insurer will consider the value of your vehicle and the estimated costs of repair. If the costs of repair exceed a certain percentage of the car’s value, your insurer will declare the car a total loss.

Some states also set what’s called a total-loss threshold, meaning a set number at which the car must be declared a total loss. For example, Maryland has a total-loss threshold of 75%, so if repairing a damaged vehicle would cost more than 75% of the car’s value, it’s a total loss.

When your insurance company determines your car to be a total loss, you’ll be paid the ACV of the car, minus whatever deductible your policy requires. Insurance companies use industry formulas to calculate your car’s ACV, but it will definitely be less than you paid for your car, even if it’s relatively new. If you have an optional insurance add-on, usually called new car replacement coverage, you’ll be paid enough to replace your car with one of a similar make and model.

Generally, the totaled car then goes to a salvage yard and the car’s title becomes a salvage title, marking it as a damaged car.

Can you dispute a total loss?

If you disagree with your insurer’s assessment of your car’s value, it’s possible to dispute the ACV. Your first step would be to negotiate with your insurer — if you’re arguing that your vehicle was worth more than what your insurance company decided, you’ll need evidence, like recent photos of your car, proof that it was well-maintained and data about what price cars of the same make and model sold for in your area.

You may also want to go out and get your car independently appraised through a repair shop, and then present that appraisal to your insurer. If that doesn’t work, you always have the option of hiring a lawyer and taking your insurer to court, although before you take that step you should consider how much you’re willing to pay to dispute your insurance company’s valuation of the car’s damages.

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Can you keep your car after it’s totaled?

As we mentioned above, when a car is determined to be a total loss, you’ll turn it over to your insurer and it will go to a salvage yard. But in some cases, you can choose to keep your car and try to repair it yourself, although it will still have a salvage title, meaning you won’t be able to drive or insure it unless the title is rebuilt.

If you elect to retain salvage, i.e. choose to keep your car after it’s been deemed a total loss, you’ll still be paid out the car’s ACV, but your insurer will subtract both the deductible and the car’s salvage price. A note: If you paid for your car with the help of a car loan and are still paying it off, the decision about what to do with the totaled vehicle isn’t yours to make, you’ll need to consult with your lienholder.

But once you take home your totaled car, it won’t be drivable. Once a car has a salvage title, you need to have it repaired and inspected by the state before the title is declared rebuilt. And even then, most insurance companies will not insure a rebuilt title car, so it’s best to consider all these factors before you decide to take your totaled car home.

Insurance Expert

Anna Swartz

Insurance Expert

Anna Swartz is a Managing Editor at Policygenius, where she has been since 2018. An expert in home, auto and renters insurance, she loves making tough concepts easy to understand and helping readers feel confident about their insurance options. Before joining Policygenius, she was a senior staff writer at Mic. Her work has appeared in The Dodo, AOL, HuffPost, Salon and Heeb.

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