How Will My Insurance Company Handle My Totaled Vehicle? | FAQ

To determine if your vehicle is totaled, insurance companies compare the cost to repair the vehicle to the vehicle’s actual cash value from before the accident. If the costs to repair the vehicle are more than the actual cash value, the insurer will generally declare the car totaled.

The insurance company then gives the car owner the actual cash value of the vehicle and takes the totaled car. If the owner wants to retain possession of the totaled vehicle, the value of the damaged vehicle is deducted from the money he or she receives for the actual cash value.

How Does the Insurance Company Value the Totaled Car?


Insurance companies determine the actual cash value of a car to come up with the amount for which the car could otherwise be sold by taking variables like:

  • Miles driven
  • Condition of the car
  • The car’s make and model

It’s a similar valuation process to the Kelley Blue Book system, and drivers can use Kelley Blue Book to double check the insurance company’s actual cash value.

In some cases, insurance companies may declare a car totaled even when the costs to repair the car are less than the actual cash value. In some states, insurance companies have the option of using their discretion to determine if a car is totaled, while other states regulate the insurance company’s behavior.

Indiana, for example, requires a total loss threshold of 70% before it issues a salvage title. This means that the costs to repair a vehicle must be at least 70% of the vehicle’s actual cash value for it to be declared totaled.

What Happens If There Is a Difference Between My Car Loan Balance and the Value of the Car?

Many drivers have the option of purchasing general auto protection (GAP) insurance through their insurance policies. GAP insurance pays the difference between the amount for a totaled vehicle that the policyholder receives in a settlement and the amount that he or she owes on the vehicle. If the owner didn’t purchase GAP insurance, he or she is obligated to pay the difference to the car financier.

What Options Do I Have After a Car Accident?

Indiana is a fault insurance state, meaning that drivers can file claims with their own insurance company if they have the appropriate coverage, the at-fault driver’s liability insurance company, or file a lawsuit against the driver if they cannot reach a fair settlement. So if another driver caused an accident that totaled a vehicle, the driver whose vehicle was totaled can make a property damage liability claim to recover the costs of the totaled vehicle.

People considering legal action should consult a car accident attorney to review their case. Hensley Legal Group handles car accident cases for drivers in Indiana, and can discuss your property damage and/or bodily injury liability cases. Contact our office at (317) 472-3333 to schedule a free consultation.