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When Is A Car Considered Totaled?

Serving Families Throughout Jacksonville
car crash, totaled car

The term “totaled” comes from the insurance term “total loss.” Although state law sometimes dictates the damage thresholds to determine when a vehicle is considered totaled, generally speaking, an insurer will declare a vehicle totaled if the costs to repair it exceeds the vehicle’s value.

Most totaled vehicles have suffered damage that exceeds approximately 70 percent of the car’s actual cash value (ACV).

Your car’s actual cash value refers to how much it was worth just before it was damaged, minus a reduction in value for depreciation. Your insurance company is responsible for determining your car’s actual cash value.

Actual Cash Value (ACV) is impacted by:

  • Vehicle’s overall condition
  • Age of the vehicle
  • Make and model
  • Demand for the vehicle in your local area
  • Salvage value or resale value of parts and metal
  • Potential for unseen damage; and other factors

Payment for a Totaled Vehicle

If the driver of the totaled car is the owner and possesses the vehicle’s title, he or she is entitled to full payment from the insurance company.

For drivers who are financing their vehicle, things get a bit tricky…

If the remaining balance exceeds the fair market value of a totaled vehicle (i.e., an estimate of the sales amount that a private seller and buyer would agree to for a particular vehicle), the insurance company will pay the financier the actual cash value of the totaled car. The owner is then responsible for paying the outstanding balance.

Drivers can gain protection from this scenario with additional insurance. Gap insurance protects car owners who owe more on their loan than the fair market value of the vehicle.

For more information about the fair market value of most vehicles, visit Kelley Blue Book Values or The National Automobile Dealers Associations.

Conversely, if the remaining balance is less than the fair market value of the vehicle, the insurance company will issue a check to the financier for the balance, which is deducted from the actual cash value of the car. The remainder will be paid to the owner.

Drivers who own, as opposed to lease their totaled car, may be able to keep the damaged vehicle after the claims settlement. Salvaged cars receive a “salvage title.”

A vehicle with a salvage title can't be driven on public roads or insured. However, once you refurbish the salvage car and it qualifies for a rebuilt title, it can be insured, registered, driven, or sold.

Insurance terms can be confusing! But getting familiar with the ones above can help you avoid a stressful situation.

To get in touch with our firm, schedule a consultation online or at (904) 701-0591