When Is a Car Considered Totaled?

Car CollisionLet’s say you’ve been in a car accident. This accident could have been just a dent, a minor fender bender, or a head-on collision that deployed the airbags. Believe it or not, there is a chance that the vehicle is deemed ‘totaled’ in any of these scenarios. What does this mean, and when is a car considered totaled? How do you know when your car is heading to the repair shop or the scrap pile? Well, this will all depend on where you live and several other factors. Let us explain. 

Defining “Totaled Car” 

Generally speaking, “totaled” is a term auto insurance companies use to describe a vehicle when the cost to repair it is greater than its actual cash value (ACV), or what the car was worth prior to the accident. However, the thresholds at which a vehicle is determined a total loss do vary from state to state.  

Total Loss Threshold 

Roughly half of the 50 states set the total loss threshold between 60% to 100% of the car’s value; this means a state with a 75% threshold would classify a vehicle in need of repairs costing more than 75% of its value as a total loss. On the other hand, this same vehicle could be determined fixable in a state with a 100% threshold because the repairs don’t exceed 100% of the car’s ACV. While insurers must total a car that exceeds the state’s legal threshold, they can still total cars under the threshold. 

Total Loss Formula 

Meanwhile, all other states which don’t assign a specific threshold percentage—including Massachusetts—leave it up to the individual insurance companies to decide when to total a car by using a total loss formula (TLF). In this case, the insurer evaluates the cost of the repairs plus the scrap value of the car. When this number meets or exceeds the ACV, they declare the vehicle is totaled; if it’s lower than the ACV, the insurer may choose to repair it. The numbers plugged into this formula can vary by insurer, so a vehicle may be totaled according to one agency and not totaled according to another. 

What is Actual Cash Value Based Off Of? 

As you can see, the actual cash value is the key determinant of a car considered totaled. So, how do you know what your ACV is? The ACV of a vehicle is calculated by the insurer who takes several factors into account, including: 

  • Make and model 
  • Year/age 
  • Condition 
  • Mileage and resale value 
  • Depreciation 
  • Selling price of similar vehicles in the area 

Other Things to Know About Accidents and a Car Considered Totaled 

  • Regardless of the collision’s magnitude, you should always follow the same few steps after getting into an accident. 
  • No matter who is at fault, all involved parties should contact their insurance agents to start the claims process upon getting in an accident. 
  • If determined to be totaled, your insurance will pay you the ACV minus your deductible.  
  • If totaled while still being paid off, the insurance payment will typically go toward the remainder of the balance owed to the lender. Anything leftover would go into your pocket. 

Don’t let yourself get into a car accident, big or small, without having total coverage from a trusted insurance agency. Here at TJ Woods, we’ve been helping protect the wallets and the cars of Central Massachusetts drivers for decades. From comprehensive coverage to collision coverage, you can always reach out to us to review your current auto insurance policies and discuss whether they’re the right fit for your needs and situation.