Life is complicated, insurance doesn't have to be.
Read time: 6.5 minutes
Are you OK?
Hopefully, somebody has already asked you this question if
you’re recovering from a car accident that may have totaled your vehicle.
To make your day a little easier, we talked with the experts
in our claims team to give you in-depth answers about what a
totaled car is and what happens next.
What is a totaled car or vehicle?
There are many variables considered when determining if
repairing the vehicle makes sense, including:
If the cost of repairs exceeds the value of your vehicle,
most insurance companies won’t pay to make those repairs and will
consider the vehicle a “total loss” or totaled.
For example, if your vehicle is valued at $10,000 and the
cost to repair the damage from an accident is $15,000, it would
not make financial sense to repair your car. In this situation, your
insurance company will likely record it as totaled. Then, they will
issue you a payment for the value of the vehicle that was totaled.
Read more: You
Just Got Into a Car Accident. Now What?
What is the typical process of an insurance claim for a
First, report your claim
How you report your claim depends on your insurance company.
For Auto-Owners policyholders, contact your local, independent agent
or utilize our afterhours
phone number, as needed.
A claim representative will evaluate your vehicle
Upon inspection of your vehicle, you will hear back from your
insurance company whether your vehicle is repairable or totaled.
Some situations may make this timeline a little bit longer,
like when your car is totaled as part of a natural disaster and
there are hundreds of other vehicles waiting to be evaluated.
However, this is not a time to wait around. Use this
time to get started on a few tasks to help you recover quickly if
your vehicle does turn out to be totaled, such as:
Find your vehicle’s title and clean out your belongings
As soon as you can, remove all your belongings from the
vehicle and find your vehicle’s title. If your vehicle ends up
being totaled, it will be towed to a salvage yard, so getting your
items out now is important.
Find a rental vehicle
If your auto policy has rental coverage on it, you have the
option of renting a vehicle after your car is totaled.
But, before you skip off to find a rental car, check your
auto policy to see how many days your policy covers and the dollar
limit, so you aren’t surprised later.
You can also reach out to your insurance agent or company for clarity.
A common misconception is you have coverage for a rental
vehicle until you find a replacement vehicle. That is not
true. You usually have a rental vehicle for only a set number of
days after your vehicle is considered a total loss, specified in
your auto policy.
Read more: Car
Insurance and Rental Cars: Everything You Need to Know
Start searching for a replacement vehicle
During this time, it’s also wise to start looking for a
replacement vehicle. The payment you receive from your claim will be
the current market value of your totaled vehicle, before damage.
You can also reach out to your claims representative to get
an idea of what amount you may receive from your claim. Keep in
mind that before your vehicle is considered totaled and a market
valuation is determined, this is only an idea of what your
vehicle may be worth.
Receive your claim payment
Lastly, your insurance company will issue you a claim
payment. Keep in mind, you’re going to be compensated the value of
the totaled vehicle, before damages. Depending on your insurance
company, this may be a paper check, a payment card or a deposit into
What happens to the vehicle after it is totaled?
When your vehicle is determined to be totaled, it will be
sent to a salvage yard. There may be some time before the
vehicle is picked up and towed, which is a good time to make
sure all your personal belongings are out of the vehicle if you
haven’t already removed them.
There are situations where your vehicle is towed to a salvage
yard right after the accident. In that situation, you will want to
reach out to the yard for help recovering your belongings.
If your vehicle is towed but your insurance company does not
consider it totaled, it may be towed back to you.
Read more: What is Comprehensive and Collision Insurance? The
Informative Answer You (Actually) Want
Do I need to pay my deductible when my vehicle
In most cases your deductible will be taken from your claim’s
payout amount. So, you likely won’t have to submit a payment for your
deductible. It will just be deducted from the payment you receive from
your insurance company.
What happens if my vehicle is totaled with a
remaining loan balance?
Your insurance company will pay off your remaining balance,
and the remaining equity goes back to you.
If you have negative equity, meaning your loan exceeds the
payment amount you’re receiving from your insurance company, the
titled owner of the vehicle will need to pay what’s left of the
remaining loan amount.
This is why Auto Loan/Lease coverage (sometimes referred to
as gap insurance) is so important. It covers this leftover amount
when your car is totaled, but has a remaining loan amount after
your claim payout is applied. Talk to your agent to discuss if you
may benefit from gap insurance.
Let’s look at an example of how this coverage works:
Let’s say your car is totaled after a bad accident. Your
car’s current value is $10,000. You have a loan on this
vehicle. Your remaining loan amount is $15,000. Your insurance
company is going to pay you the current value of your car
($10,000). This leaves a remaining $5,000 balance on your loan,
which you will need to pay. If you have Auto Loan/Lease coverage, it
may pay the remaining $5,000 for you.
Why is my vehicle worth less?
One of the areas of misconceptions when it comes to totaled
vehicles is the worth of the damaged vehicle. Oftentimes people expect
to receive a claim payment to cover the cost of a brand-new vehicle,
or a vehicle that is newer than the one that’s totaled.
However, this is not what most policies provide. Your
insurance policy will pay the actual cash value of the damaged
vehicle, which is the amount you would pay for that vehicle today.
One way to look at this is to remember that an insurance
claim is not a refund on that vehicle. This means you’re not going
to get the exact amount you paid for that vehicle back.
You will be paid the actual cash value of the damaged
vehicle. This is an important distinction. The goal of insurance
is to help you get your life back to where it was before the accident/loss.
Some insurance companies offer additional coverages that
allow you to be compensated the purchase price of your vehicle
rather than the actual cash value. Typically, these are only
available for newer vehicles.
At Auto-Owners, these coverages are the Purchase Price
Guarantee coverage and the Total Loss to a New Automobile coverage.
Talk to your agent to see how these coverages can benefit you.
How long can I have a rental vehicle when my
car is totaled?
Every auto insurance policy is different, so look at your
policy to find how many days and what dollar limit you may have
for rental car coverage. Notice it is a specified number of days
after your vehicle is considered a total loss, not just however
long you need it to find a replacement vehicle. This is another
reason why starting your search for a replacement vehicle quickly
We hope you’re safe and back on the road soon! To learn more
about the car insurance coverages mentioned in this article, talk to
your local, independent
Auto-Owners Insurance Company © 2022. All Rights Reserved.
*Products referenced may not be
approved/available in all states. Limitations and conditions
may apply. Premium will be based on benefits chosen and
policy rates available at time of application.
Disclaimer: This article is not expert advice. The
analysis of coverage is in general terms and is superseded
in all respects by the Insuring Agreements, Endorsements,
Exclusions, Terms and Conditions of the Policy. Some of the
coverage mentioned in this material may not be applicable in
all states or may have to be modified to conform to
applicable state law. Some coverages may have been
eliminated or modified since the publishing of this
material. Discounts may not be available in all states.
Limitations and conditions may apply. Premiums will be based on
benefits chosen. Please check with your local Independent
Auto-Owners Insurance Agent for details."