What happens when your car gets totaled in an accident?


If you have collision and comprehensive coverage, your insurance company will cover a total loss.

Anna Swartz


Anna Swartz

Anna Swartz

Managing Editor & Auto Insurance Expert

Anna Swartz is a managing editor and auto insurance expert at Policygenius, where she oversees our car insurance coverage. Previously, she was a senior staff writer at Mic.com, as well as an associate writer at The Dodo.

Published April 26, 2019 | 4 min read

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Totaling a vehicle is every driver’s worst nightmare. Whether your car was damaged in a collision, ruined by a flood, crushed by a falling tree limb or damaged some other way, when a vehicle seems damaged beyond repair, it can be a stressful and overwhelming experience.

The burden of deciding whether or not your car is totaled isn’t on you, however. When you file a claim on the damage, your car insurance provider will compare the repair estimates to the value of your car, consider the long term effects of the damage, and decide whether the vehicle is a total loss.

Your car insurance can cover a total loss, it just depends on your car insurance policy. And how much compensation you receive will also depend on a few different factors. If your car has just been totaled, here’s what you need to know.

What does it mean when a car is totaled?

Usually, a car will be determined to be a total loss if it would cost more to fix than the vehicle is worth. Some states may have regulations that require a car to be declared a total loss if the costs of the damage are above a certain percentage of its value. For example, in Maryland, the total-loss threshold is 75%, which means that if the price of repairing the car is more than 75% of its market value, the car is considered a total loss.

When you file a claim with your car insurance company following damage, you’ll be assigned a claims adjuster. Your claims adjuster is your point of contact with your insurance company as you move through the claims process, and they and your insurance provider will establish whether the vehicle is actually a total loss.

What will insurance pay for a totaled car?

A total loss will be covered if you have collision and comprehensive coverage as part of your car insurance policy. Collision coverage covers damage to your car after an accident, and comprehensive coverage covers damage to your car that happens when it’s not being driven, like damage from fire, flood, hail, falling objects, vandalism and theft.

Both comprehensive and collision coverage require a deductible, which is an amount you have to pay out of pocket before your insurance will cover the rest of a claim. Often the deductible for these coverages is set at $500 or $1,000.

If you drive a leased or financed car, you may have been required to add comprehensive and collision coverage to your policy. If you do not have collision and comprehensive coverage, your insurance likely won’t cover the cost of a total loss.

If you do have collision and comprehensive coverage, however, and your vehicle is determined to be a total loss, your insurer will pay you the actual cash value (ACV) minus the deductible required by your comprehensive or collision coverage.

The ACV is essentially the market value of your car before it was totaled, and it’s usually less than whatever you paid to purchase the car, because it takes into account usage and wear and tear. For example, if you purchased your car for $20,000, but you’ve been driving it for four years, your insurance company might calculate the ACV to be $13,000.

How is ACV calculated?

Most car insurance companies use an industry formula to come up with your car’s ACV. It takes into account factors like how long you’ve had your car, its make and model and how many miles it has on it in order to gauge how much your car has depreciated in value since you bought it.

What is new car replacement?

Some car insurance providers offer additional coverage add-ons that can help ensure you receive more than the ACV of your car in the event of a total loss. Many providers, including Allstate, MetLife, Safeco and Travelers, offer new car replacement coverage, which will pay you the cost of replacing a totaled car with another of the same make and model.

Often, this type of coverage is only available for the first year or two after you purchase a brand new car. It can be a pricey add-on to your coverage, but if you want assurance that your car insurance provider will pay enough to fully replace your car in the event of a total loss, this is one way to do it.

What happens when you total a car that is financed?

If you financed a car, that means you borrowed money from a lender to purchase your car, and, until you fully pay back your loan, your lienholder has a financial stake in your vehicle.

So what happens if your car is totaled and you still owe money on it? There’s a chance you could wind up making car loan payments on a car that doesn’t even exist anymore. That’s what gap insurance is for.

Gap insurance is a type of coverage add to your policy that will cover the difference between what your insurer will pay out on a total loss and what you still owe, so you aren’t left underwater on your car loan. Your lienholder may require you to add gap insurance to your coverage, but even if they don’t, it can be a smart buy if you’re still paying off a car.