What Determines If My Car Is Totaled?

car is totaled

After assessing the damages, your insurance company will determine if your car is totaled or not. But what does it mean when your car is totaled? And how do insurance companies determine if a car is totaled or not? In this article, we’ll answer these questions and provide you with insights into the methods insurance companies use to determine whether or not your car is totaled.

What is Actual Cash Value?

First, let’s cover Actual Cash Value. This is the market value or what it would cost to purchase another vehicle like yours. Your claims adjuster will consider the age of the vehicle, miles, condition and more. They’ll also look at comparable vehicles in your area that are for sale.

You can dispute the calculated Actual Cash Value or “Market Value” with your claims adjuster. We’ve seen many offers revised. One of the first things you can do is go to a one of the car sales websites, like Autotrader, and search for similar vehicles in a 50 mile radius. If the average sale price of these cars is greater than the Actual Cash Value determined by your claims adjuster, submit your findings to them.

Definition of “Totaled”

Next, let’s define what it means for a car to be totaled. When a car is deemed totaled, it means the cost of repairing the car exceeds a threshold set by the insurance company. In other words, if repairing the car will cost more than this threshold, the insurance company will declare it a total loss and pay you the car’s actual cash value, minus any deductible you may have.

This is going to vary by state. Many states determine their total loss threshold by stating a percentage of the vehicles actual cash value. It can range from 50% to 100%. If they have a 75% rule (Alabama, Kansas, Kentucky Louisiana are just a few), they will determine your car is totaled if the cost to repair the vehicle is 75% or more of its Actual Cash Value.

For example:

$10,000 Actual Cash Value

75% Rule

$7,500 or more in damage will result in a vehicle being a total loss or “totaled”.

Some states such as Arizona, California, Georgia and others use what is called a Total Loss Formula. This is going to be a bit more vague and also varies by state. They’ll use language such as “uneconomical to repair” or “requires replacement of more than five minor component parts” rather than a percentage of the vehicles Actual Cash Value.

Rental Car Cost Can Affect Actual Cash Value

Another factor that may affect the total loss decision is the cost of rental cars. If the repairs are extensive and will take a long time to complete, rental car costs can add up, making it more economical for insurance companies to declare the car a total loss and pay you the actual cash value of the car.

It’s not uncommon right now to see rental car costs exceed $1,000 due to repair times taking so long. Especially if you drive a truck or SUV. Those rental car costs can be 30% – 50% more than renting a sedan.

New Cars That Depreciate Fast

If you have a newer car, you run the risk of the market value being less than the amount you owe on your loan. This is due to new cars depreciating the fastest in the first few years. The best way to protect yourself against this risk is to have GAP insurance.


Being involved in a car accident is never a desirable situation, but it’s important to know what to expect when dealing with insurance companies. Don’t be shy to dispute the market value of your vehicle, but do your homework first. Don’t just tell the claims adjuster you disagree with them. Provide some supporting documentation and they’ll know you mean business.

With this knowledge, you can make informed decisions and move forward after getting into an accident with the peace of mind that you are well-equipped to navigate the insurance claims process.

If you didn’t buy direct from some comparison website, and instead chose a reputable brokerage like Partners Insurance, call your agent and have them do the work for you. Shameless plug!

They have they experience and industry knowledge to better your chances of getting an higher value for your vehicle. And you can probably think of better things to do than argue with a claims adjuster about insurance!

Related Articles

Should You Buy Gap Insurance?
What to Do After a Car Accident
Car Insurance | 9 Ways to Lower Your Rate

Request Your Proposal Here

Are you ready to save time, aggravation, and money? The team at Partners Insurance is here and ready to make the process as painless as possible. We look forward to meeting you!

Call Email Policy Service Payments