Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Former Farmers Insurance CSR

UPDATED: Nov 12, 2020

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Totaling a car is a difficult experience, to say the least. Fortunately, you’re not the first person to total a vehicle. Today, we’re explaining everything you need to know about totaling a vehicle, including how it works with your car insurance, how much you can expect to pay, and what kind of long-term effects you can expect.

What Does It Mean to “Total” a Car?

When you “total” a vehicle, it means the cost of repairing a vehicle exceeds the value of that vehicle. You wouldn’t spend $10,000 to repair a vehicle that’s only worth $5,000.

If you’re involved in a serious collision, then your car might have significant damage. Your insurance company will analyze the damages (or send you to a car repair shop to assess the damages). If your damages exceed a certain value of your car (based on a percentage), then your insurance company will decide that your car isn’t worth repairing. At this point, the insurance company will cut you a check for the value of the vehicle.

Totaling a car doesn’t necessarily mean the damages exceed the car’s value. Instead, insurance companies have different definitions of “totaling” a vehicle – typically between 50 to 80% of the vehicle’s value.

Here’s what all of this means: if you have an older, less valuable vehicle, then you might “total” your car after a simple fender bender. On newer, more valuable vehicles, your car will only be totaled if it’s involved in a serious collision with significant damage.

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When Is a Damaged Car Considered a Total Loss?

Defining a “totaled” vehicle isn’t an exact science. The ultimate decision about whether your car is totaled or not rests with your insurance company.

Your insurance company may decide your damaged vehicle is a total loss if:

  • It cannot be repaired safely
  • Repairing the vehicle would cost more than the vehicle is worth
  • State laws require the company to call it a total loss due to the amount of damage

States have different laws regarding totaled vehicles. In Iowa, for example, laws state that a car can be totaled if the repair costs exceed 50% of the car’s pre-accident value, while in Texas, cars are only totaled if the repair costs exceed 100% of the car’s pre-accident value.

Other states have something called a “Total Loss Formula”. Because of the Total Loss Formula, your car might be “totaled” even when the cost of repairs is lower than the value of the vehicle. The formula varies between states. However, the core idea of the formula is that the cost of repairs plus the scrap value of the car must equal or exceed the car’s pre-accident value in order for a vehicle to be declared “totaled” by an insurance company.

Do You Lose Money When Your Car is Totaled?

Totaling a car isn’t necessarily a bad thing. It’s not a total loss when you total a car. Remember: your insurance company is still liable to reimburse you for the value of your vehicle.

When you get car insurance, you’re signing a contract with your insurance company requiring your insurance company to compensate you against certain losses. Damage to your vehicle is one such loss (assuming you have collision or comprehensive coverage).

When you total a vehicle, your insurance company will pay the cash value of your vehicle beyond your deductible. You can put this cash towards another vehicle, if you like.

You can even use the cash to repair your totaled vehicle. Sometimes, your insurance company will let you keep the damaged vehicle, but in most cases, your vehicle will be sold during a scrap auction and the insurance company will keep the proceeds of the sale. However, some insurance companies give the option of keeping the vehicle and getting a “salvage title” for it.

The important thing to remember is that you haven’t technically lost money. You had a vehicle worth $10,000. That vehicle was damaged to a point that it was “totaled”, and the repair costs would have equaled or exceeded $10,000. You received $10,000 in compensation for those damages. You’ve broken even. However, it’s easy to feel like you’ve lost money – especially if you purchased a brand new vehicle for $40,000 three years ago and that vehicle is only worth $20,000 today in the eyes of your insurer.

How Will Totaling a Car Affect My Rates?

If you’re involved in an at-fault collision and your car is totaled, then your insurance premiums will almost certainly increase.

However, your rates may not increase if you’re involved in a collision where you’re not at-fault.

Insurance companies calculate higher premiums in different ways. With some insurance companies, totaling a vehicle will lead to higher insurance premiums for 5 to 7 years. Other insurance companies ignore at-fault accidents after just 3 or 4 years.

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If you’re involved in a collision where your car is totaled, then your insurance prices will almost certainly increase (assuming you were at-fault). If you were not at-fault, then your insurance prices may stay the same. Fortunately, even if your rates do increase, you can start comparing quotes today to get the best deals on car insurance.