If you have been in a car accident and your vehicle is described as a totaled car, it means your vehicle is beyond repair, or it could be more expensive to repair and exceed the value of the vehicle. If your vehicle is totaled, then it may also be referred to as a total loss. Some states have laws that define a totaled car by specific thresholds; in other cases, the insurance company will determine whether it is a total loss or not. 

With more than ten million vehicle accidents occurring annually, you could possibly become a victim of the statistics. The aftermath of a car accident is often overwhelming to deal with. While you may need to address your own emotional state and possible physical injuries, you will also need to deal with the damages to your vehicle and the stress of handling insurance claims. So, what do you do when your car is declared a total loss? We take a look at some of the options available to you. 

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### What Happens if Your Car is a Total Loss?

What happens if you receive a total loss declaration from your insurance company? If you are not disputing the insurer's verdict, there are a few things to know about the total loss process. 

If you are leasing your car, you need to contact the leasing company and inform them of the total loss. 

__Below is what you should do if your car is a total loss: __

- Remove the front and rear license plates
- Remove your personal items from the car
- Give the car keys to your claims adjuster
- Complete all the required insurance work

Now that you have a better understanding of what a totaled car is, you may ask, what can I do with my totaled car, and is my car really no longer valuable? Let's explore the options available. 

### Option 1: Take the Money and Let Your Insurance Company Pay You

Once the insurance company comes back to you after the accident and announces your car a total loss, they will tell you what the vehicle's actual cash value is. The insurance would pay you the actual cash value of your car less the deductible if the claim was made against your insurance policy. This basically means that your insurer bought your motor vehicle from you and gets the car's title. If you are still paying off a car loan, you are responsible for settling the lender with those funds. If you come up short on the amount owed on your car loan, then use your gap insurance policy (hopefully, you have this cover) to pay the balance. 

The easiest way to handle a totaled car is to accept the insurance payout. Depending on the state law where you reside, your insurance company may: 

Replace your totaled vehicle with a comparable one, especially if you have replacement coverage.

Offer you a cash payout equivalent to your totaled car's actual cost value.
If you feel your insurance company isn't giving you a fair offer, you can challenge them for a better payout. You can go online to Kelley Blue Book to understand what a fair market value is for your car. 

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### Option 2: Keep the Totaled Car and Repair it

Sometimes there is still a glimmer of hope, even if your car is a total loss. If you can safely drive it or have it towed to a repair shop, then you may want to repair it and keep it. While restoration back to a new vehicle is unlikely, you may be able to get it back on the road again. 

If you want to keep the car and repair it, then do not submit an insurance claim at all while you make the safety and cosmetic changes on your own account. Should you decide to file a claim, your insurance company may take over with the decisions from that point on. They may allow you to keep your totaled car but may deduct the car's salvage value plus any deductible if the car accident was your fault. You will receive a check for the remainder together with the salvage title. 

Unfortunately, you cannot always repurchase your car as a salvaged vehicle from the insurance company. "If you're getting paid by the insurer, you can't keep your wheels," at least in Illinois, says Lynette Simmons Hoag, a Chicago attorney. 

If you can repurchase the car, you will need a rebuilt title and prove that the vehicle is roadworthy and safe to drive. However, the state laws vary for rebuilt titles, and it may be difficult to get insurance on a rebuilt car, so do your research carefully. 

It may make financial sense to rebuild a new car that was totaled, but even old cars can be fixed cheaply. 

### Option 3: Keep the Car and Don't Repair it

Assess the nature of your vehicle's damage carefully. Sometimes a single scratch to the side of your car may require a paint job that costs thousands of dollars to restore the original cosmetic appearance. Hail damage can also damage a vehicle to the point it's deemed a total loss because of the repair costs. But, you can still safely drive a hail-damaged car. If your car still runs safely and its mechanics are all in order, you can keep on driving it since there is only cosmetic damage. 

### Option 4: Keep the Car for Parts

When an insurance company buys your totaled car from you, they sell the car parts. You can do the same.

If your insurance won't pay for the repairs and the car is not a quick repair to be done by yourself, then it may be best to keep the car for spare auto parts. This may be a viable option if the make and model of your totaled vehicle are similar to another car you own. If you don't see yourself using those parts again, you could sell off the spares in good working order. 

### Option 5: Sell Your Totaled Car to a Salvage Yard

You can keep your totaled vehicle and sell it to an auto salvage yard for cash. However, ensure you find a licensed scrap car buyer, and they should tow your car for free. Take your time to research the value of your vehicle before selling it to a salvage yard, so you get a fair price. Not all junkyards will pay top dollar for your totaled car. 

### Option 6: Donate Your Car

Lastly, you can donate your totaled vehicle to a nonprofit organization. Several charities accept vehicle donations, including totaled cars. Many donation services will tow your car for free. The organization will then sell your totaled car for parts. Your reimbursement for the good deed is a tax deduction for the depreciated value. 

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### What is a Totaled Car?

We briefly mentioned what a totaled car is, but let's look at it in further detail. 

Depending on your home state law and whether you or another driver caused the car accident, the damage to your vehicle may be covered by your insurance policy or by the other driver's insurance. Once you file your insurance claim, a claims adjuster from your car insurance company will be assigned to your case. The adjuster's job is to assess the claim and determine how much the auto insurance company should pay out towards the repairs. 

However, the adjuster may conclude that your car is a total loss or refer to it as a totaled vehicle if it isn't repairable or if the repairs exceed the car's actual cash value (ACV). Insurance companies typically have their own formula against which they determine if the car is a total loss. 

While in most cases, a car is declared a total loss due to an accident, it could have also died of old age. It may either be too far gone to repair or get auto spares for, or the cost of repairs exceeds the actual value of the car.

### Total Loss Insurance 

Total loss insurance provides coverage for when your car is seriously damaged and irreparable. If your vehicle has total loss coverage, your insurer will pay you for your totaled vehicle. The first method used is known as the total loss threshold, and the state you live in is a determining factor. The total loss threshold is a percentage of your vehicle's market value. This means if your damages exceed the threshold percentage, your car will be declared a total loss. 

Not all states have a specific state law surrounding the total loss threshold; instead, they have a total loss formula (TLF). The TLF equals the fair market value of a car less its salvage value. If the repair costs exceed the TLF outcome, your insurance will declare your vehicle as a total loss. 

Should you submit an insurance claim against the other driver, then your claim will fall under their policy's property damage liability coverage. If you are the driver at fault and the other driver claims against your policy, then either your collision coverage or comprehensive coverage will apply. 

Collision insurance on your policy covers damages to your car caused by an accident with another vehicle. Comprehensive coverage provides insurance for the damage caused by something else, such as a fire. These two separate insurance coverages are typically required on your car insurance policy if you financed your vehicle with a car loan or have a rental car.

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### How is the Value of Your Vehicle Determined?

We explained that a totaled car has repair costs that exceed the value of the vehicle. But, how is the value of your vehicle determined? In insurance terminology, this is better known as the actual cash value. 

__To calculate the actual cash value of your car at the time of your car accident, your insurance company will use several factors, including your car's:__ 

- Age
- Condition
- Mileage
- Resale value
- Selling price of similar vehicles in your area.

Turn bad news into good news and make the best out of your totaled car with these practical options on what to do with your damaged vehicle.

What Can I Do With My Totaled Car?

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