Being involved in a car accident is stressful as is, but watching your totaled car be towed away can set you over the edge. Even though it may feel like the end of the world right now, it’s not. You might be wondering how much insurance will pay for a totaled car.
What Is Considered a Total Loss (and What’s Not)
A car insurance company decides a car is “totaled” when the cost to repair it exceeds its value in the Kelley Blue Book. This is called “book value,” which is just another way to declare a vehicle’s market value. Kelley Blue Book is the golden standard for determining a car’s value because it keeps track of what every make and model sells for.
Most states have specific total loss thresholds, typically ranging from 70% to 80% of the car’s value. But generally, car insurance will not cover repair costs if the repairs cost more than your car’s worth.
However, not every heavily damaged car is considered totaled. Here are some common situations where a car may seem totaled but isn’t:
- High Repair Costs but Below Threshold: If your car’s repair costs are significant but still under your state’s total loss percentage, the insurer may require repairs instead of a payout.
- Cosmetic Damage: Extensive dents, scratches, or paint damage may look severe but won’t necessarily make the car a total loss.
- Older Cars with Lower Market Value: An older car with minor damages might reach the total loss threshold quickly, but a newer car with significant damage might not be considered totaled.
- Drivable Condition: If the car is still safe to drive despite damages, the insurance company may opt for repairs instead of declaring it a total loss.
If your insurance company decides that your car is totaled, you’ll be reimbursed for the book value of your vehicle.
How Insurance Companies Calculate Payment
As mentioned, most states have a threshold for determining a total loss. Some states may not have a threshold and instead use a total loss formula (TLF) to calculate payment.
In Arizona, that threshold is 70% of its Actual Cash Value (ACV). In Utah, payment is found by way of the total loss formula. The TLF looks like this:
Cost of Repair + Salvage Value ≥ Actual Cash Value.
Actual Cash Value (ACV) is the amount equal to the replacement costs minus any property damage. Replacement cost is money the insurance company could reimburse you for your vehicle.
How Your Deductible Affects the Payout
When your insurance company determines the total loss payout, they will subtract your deductible before issuing the final payment. For example, if your car’s ACV is $15,000 and you have a $1,000 deductible, your final payout will be $14,000. If your loan balance is higher than the payout, you’ll still owe the remaining balance unless you have gap insurance.
Your deductible applies whether you’re financing, leasing, or own the car outright, so it’s important to know how much will be deducted from your final payment.
Types of Coverage for Totaled Cars
When it comes to car insurance coverage, you have options. Below are several types of coverage options that can help you with your totaled car.
Collision Insurance
This coverage pays for damages to your car caused by a collision with another vehicle or object. If your car is totaled after colliding with a vehicle, object, tree, or guardrail, auto collision insurance will cover the damages regardless of who is at fault.
Comprehensive Insurance
Comprehensive car insurance covers damages caused by fires, floods, severe weather conditions, or any other circumstance beyond your control. This type of insurance can also cover your vehicle’s value, not including your car insurance deductible.
Comprehensive insurance can also cover repairs for vehicles that were stolen and then later found.
Gap Insurance
Guaranteed Auto Protection (GAP) insurance is an optional add-on to your coverage. If a car is declared a total loss, this insurance addition helps bridge the gap between the amount owed on the vehicle and the ACV. This means you won’t be responsible for repaying the remaining balance on your car lease.
New Car Replacement Insurance
Unlike GAP insurance, New Car Replacement insurance is an optional type of financial protection that covers a brand-new vehicle. However, you will still have to make payments on your lease. New Car Replacement insurance is recommended for those insuring vehicles that are less than one year old and have less than 15,000 miles.
Steps To Take After Your Car Is Totaled
The best piece of advice we can give you following a car crash is to stay as calm as possible. We understand that staying calm is a tall order, but it’s really important to stay proactive rather than reactive during this time. Here are some tips.
1. Immediate Actions Post-Accident
Prioritize your safety, check for injuries, and call law enforcement. If you were in a collision with another vehicle, swap information with the other party and collect names, addresses, and insurance details. Document the scene by taking pictures of damages and relevant details and obtain any surveillance footage if possible.
From there, you should seek immediate medical attention regardless of how minor you think your injuries are.
2. Filing a Claim With Your Insurance
Report the accident to your insurance company, but give them any details until you’ve spoken with an experienced car accident attorney. If you were in an at-fault accident, anything you say to insurance can be held against you during legal proceedings. Give yourself the best chance at receiving maximum compensation by contacting the team at Esquire Law.
5. Contact a Car Accident Attorney
Contacting an attorney is one of the smartest moves you can make following a collision. Car accidents are complicated and representing yourself is extremely hard. Esquire Law takes the added weight off your shoulders so you can fully recover without the extra stress.
With a proven track record and countless success stories, Esquire Law is ready to take on your case. Contact us for a free evaluation.
4. Negotiating With Insurance Companies for a Fair Settlement
Make sure you understand your insurance policy before negotiating. That being said, you have every right to negotiate with an insurance company for a fair settlement. We know that you might want to settle early, but settling early can result in you not receiving the compensation you need. Leave the negotiating to the pros and contact Esquire Law.
What Happens To My Car?
When your car is totaled, it’ll either be auctioned off to a salvage yard or you can keep it. More often than not, your car will be towed away to a salvage yard unless you’re permitted by law to take it home. If you keep your car, it will receive a salvaged title. You can also give your totaled car to charity for a tax deduction.
Disputing a Low Insurance Payout
If you believe your insurance company’s payout for your totaled car is too low, you have the right to dispute it. Insurers determine a car’s value based on market data, but their calculations may undervalue your vehicle—especially if they overlook upgrades, special features, or recent maintenance that increases its worth.
You have a right to negotiate with your insurance company for a better payout. If you’re going to do this, make sure you have enough supporting documentation to back up your claim. This documentation should include your vehicle’s estimated retail value, recent sales, and a list of your car’s features.
Keep in mind that your insurer may reject your counteroffer. If this happens, you can either reach out to your state’s insurance department or contact Esquire Law for additional legal assistance. Our team is available 24/7 and ready to take your call.
Get Help Navigating Insurance Payouts for Totaled Cars
If you’ve recently been involved in a car accident in Arizona or Utah, you’re in good company. If your car was totaled, our car accident lawyers can help guide you through the legal complexities of insurance payouts and assist you in achieving the highest compensation available.
Through superior representation and a commitment to our clients, we promise to fight for your rights. Don’t negotiate with insurance companies alone. Choose Esquire Law today. Our lawyers are ready to take your call no matter what time or day it is—and the best part is that it’s 100% free and confidential.