When a car is a total loss
An insurer declares a car a total loss when repairs would cost more than its value, or more than a percentage of its value set by state law, commonly 70% to 80%. You are then paid the car’s actual cash value (ACV) instead of repairs.
What the payment should include
- Actual cash value: what a comparable car, same model, trim, mileage and condition, sold for locally just before the crash
- Sales tax on that value, required in many states
- Title and registration fees, required in many states
- Minus your deductible if you claim through your own collision coverage
Challenging a low valuation
Ask for the valuation report and the comparable vehicles used. Check the trim, options and mileage, and look up local listings for the same model. Many policies include an appraisal clause that lets you hire an independent appraiser if you disagree.
When you owe more than the car is worth
If your loan balance is higher than the settlement, you still owe the difference. Gap insurance covers it if you have it.
Questions people ask
Can I keep my totaled car?
Usually yes, for the settlement minus its salvage value, but it will get a salvage title.
Does the insurer have to pay sales tax on a total loss?
In many states, yes. Check your state insurance department’s rules.