When you're involved in a car accident, or your vehicle sustains significant damage, you might ask yourself, "Is my car totaled?" It’s a question no driver wants to ask, but it’s an important one to address. In this blog, we’ll define a totaled car, discuss how insurance companies determine a totaled car, and discuss what you need to do when your car gets totaled.
Totaled Car Meaning
Generally, a totaled car means that the repair costs exceed the vehicle’s actual cash value (ACV) — i.e., how much your car is worth at the time of your loss.
Your insurance company will usually inspect your damaged vehicle before declaring it a total loss. Depending on the type of car insurance coverage you have, your insurer may reimburse you with the amount they deem the car is worth, minus your deductible. For example, if your car is valued at $4,000 and your deductible is $500, you would receive $3,500.
When Is a Car Considered Totaled?
The formula insurance companies use to determine whether a car is totaled varies by state. Here are the two standard methods:
- Total loss threshold: A vehicle is declared totaled if the repair costs more than the state’s set percentage of the vehicle’s actual cash value. For example, Maryland has a total loss threshold of 75%, meaning that the car may be totaled if the damage exceeds 75% of the car’s value. So, if the vehicle is worth $5,000 and repairs cost $4,500, the car would be considered totaled.
- Total loss formula: If a state doesn’t have a threshold, a car insurer may use this formula to determine a totaled car — cost of repair - salvage value ≥ actual cash value. In other words, the vehicle will be deemed a total loss if the cost of repair and salvage value is more than the car’s actual cash value.
How States Define ‘Totaled’ Differently
Each state has its own laws when determining a total loss. To show the differences between states, here are the laws in the states where Mercury offers coverage:
- Arizona: Total loss formula
- California: Total loss formula
- Florida: 80% total loss threshold
- Georgia: Total loss formula
- Illinois: Total loss formula
- Nevada: 65% total loss threshold
- New Jersey: Total loss formula
- New York: 75% total loss threshold
- Oklahoma: 60% total loss threshold
- Texas: 100% total loss threshold
- Virginia: 75% total loss threshold
What Happens When Your Car Is Totaled?
As you have the right coverage on your auto insurance policy, you can get reimbursed after totaling your car. Here are a few scenarios that can happen:
The accident was your fault.
If you total your car after hitting a vehicle, tree, guardrail, or another object, and it was your fault, your insurer will pay you the vehicle’s value — minus the deductible — under collision coverage.
The accident was the other driver’s fault.
You have two options if the other driver is responsible for totaling your car:
- You can have their insurer pay you the value of your totaled vehicle with the at-fault driver’s liability coverage
- You can use your collision coverage to help cover the damages.
Your car gets damaged outside your control.
If your car gets totaled due to a fire, falling object, vandalism, or any other event outside your control, comprehensive coverage helps pay you the vehicle’s value minus the deductible.
You get hit by an uninsured or underinsured driver.
If your car gets totaled by a driver with no insurance or inadequate coverage, uninsured/underinsured motorist coverage can help cover your vehicle up to a specified dollar amount on your policy. The availability of this coverage varies by state, so check with your insurer to see if you can get coverage.
What Happens When You Total a Leased Car?
If your leased car gets totaled, your collision coverage pays your lending institution the actual cash value of your vehicle minus the deductible. When filing a claim, give the account number and your lender’s information to your local agent.
What happens if the insurance payment isn’t enough to pay off your lender? Gap insurance can help cover the difference between your vehicle’s actual cash value and the total owed to your lender. For example, if your insurer determines that your vehicle’s actual cash value is $10,000 but you owe $2,000, gap insurance can take care of the extra $2,000 minus the deductible. Without gap insurance, you would have to pay the difference out of pocket.
Dealing with a totaled car can be stressful. But with the right coverage, you can get the compensation needed to explore new car options, replace your vehicle, and return to the road. To ensure you’re protected in a total loss situation, purchase an auto insurance policy from Mercury and get best-in-class coverage at an affordable rate.