What Happens When Your Car Is Totaled But Still Driveable? '24

Accidents, crime, natural disasters and other covered events may cause serious car damage. If you or an at-fault party has insurance covering the damage to the vehicle, the insurer will evaluate the damage and decide how to pay you. If the vehicle suffered minor damage, the insurer will pay to repair the vehicle.

The insurer can also declare the vehicle a total loss. When an insurer “totals” a car, it means the repair cost exceeds the vehicle's replacement cost. In other words, the decision to total a car is purely an economic decision, not a reflection of its driveability. What happens when your car is totaled but still drivable?

Total Loss of a Vehicle

An insurer will declare a vehicle a total loss when it saves money by doing so. For example, your vehicle might need $10,000 in repairs after a crash. In its undamaged state, its fair market value is $9,000. The insurance company will pay the least by totaling the car and paying you $9,000 rather than $10,000 to repair it.

Some states allow insurance companies to total a car when the repair costs exceed a predetermined percentage of the replacement cost. For example, New York allows insurers to total a vehicle if repair costs exceed 75% of the vehicle’s retail value at the time of loss.

Other states use a Total Loss Formula. The TLF compares the vehicle’s actual cash value to the sum of its repair cost plus salvage value. Insurance companies can total a car if the latter number exceeds the actual value.

California law considers a car totaled when it is impossible or “uneconomical” to repair. It uses the TLF formula to determine that.

Options After an Insurer Totals Your Car

Sometimes, the insurer’s choice to total your car is inconvenient. High deductibles or inadequate coverage may make replacing a car impossible–especially if the incident causing damage was your fault.

A totaled car is often not a problem with adequate insurance coverage. However, if you do not carry collision or uninsured motorist coverage, you may face issues if you need a car to get to work and generally experience life.

Fortunately, you have options, especially if your car is still driveable. Here is how to navigate when you have a totaled car.

Take the Insurance Payout

If your auto insurance policy includes collision and comprehensive coverage, the insurer will inspect your vehicle and get estimates for its repair. It will offer you the vehicle’s actual cash value minus your deductible upon declaring it a total loss. The cash value will not include aftermarket customizations unless you add them to your policy.

After a crash where someone else was at fault, their liability insurer will pay you. The liability insurer will not subtract any deductible from the actual cash value. The insurer will also cover any personal property destroyed in the crash. For example, if your eyeglasses were in the car, you can include them in your claim.

However, the at-fault driver’s liability insurer will only pay up to the policy limits even if your losses exceed that cap. An insurer that issued a liability policy with $35,000 in property damage coverage will only pay $35,000 after totaling your $60,000 SUV. You must use uninsured or underinsured motorist coverage to cover the $25,000 gap or pursue the driver’s personal assets in a lawsuit.

You can take the insurance payout when you agree that the car is not worth saving. What happens when your car is totaled after you take the insurance check? In that situation, the insurance company will take what remains of your vehicle to a salvage yard.

Scrap the Car

A salvage yard will pay you the scrap value of the car. If you do not have collision or comprehensive coverage, the money you get from scrapping the car can go toward replacing it.

If you have collision or comprehensive coverage or someone else was at fault for your crash, the insurer will pay you even if you keep the car. You will receive the actual cash value minus the scrap value. Your insurer will also subtract the deductible.

Sometimes, you can come out ahead by scrapping it yourself. If the insurer assumes the scrap value is $1,000 and your salvage yard offers $1,500, you earn an extra $500 for taking it to the scrap yard.

Sell the Car or Trade It In

You can sell your vehicle to a private party or trade it at a dealership. A private sale usually nets more money, but finding a buyer takes time. You should disclose the crash in the listing so the buyer knows the state of the car.

Drive the Car

If the car is in a safe condition, you can drive your car after the insurer totals it. You should have the vehicle checked by a mechanic to find any hidden hazards like exhaust leaks. If your mechanic gives you the green light, you can continue to drive it even after taking a payout from your insurer or the at-fault driver’s insurer.

However, totaled cars must receive a salvage title. A salvage title indicates that the insurer declared the car a total loss. It is a consumer safety measure so buyers know a car was previously totaled and may have safety issues.

You have to report the vehicle’s destruction and receive the salvage title before the state considers the car road legal. In Washington state, for example, you must surrender the original title and apply for a salvage title within 15 days of the total loss declaration.

Repair the Car

Are you handy with cars? Repairing rather than scrapping it may be an option. You may find the necessary parts at a junkyard and save money on repairs.

If you have extra cash, you can hire out the repair too. However, you may pay more than buying a new car.

Learn More About Your Insurance Options

Insurance companies are not always upfront about what happens when your car is totaled but still drivable. You can dig into your policy and still not understand your rights after the insurer declares your vehicle a total loss.

To better understand your options, file for a free claim review with ConsumerShield today.