When an insurance company declares a car totaled, it means the cost of repairing the vehicle exceeds a significant percentage of its value – the total loss formula – which varies by state. In such cases, the insurance company will compensate the policyholder for the car’s actual cash value and take ownership of the damaged vehicle. 

Some policyholders may want to buy back their totaled car but find their insurance company won’t sell it back to them. Keep reading to learn why this happens.

Key Highlights
  • A vehicle is declared totaled when repair costs exceed 70-80% of its value, resulting in a salvage title with diminished resale value.
  • Insurance companies often deny buyback requests due to the risks involved with driving a previously totaled car.
  • If denied, consider using the claim amount to buy a similar vehicle or repair the car independently, ensuring it meets safety standards. 
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Written by:
Shivani Gite
Contributing Writer
Shivani Gite is a personal finance and insurance writer with a degree in journalism and mass communication. She is passionate about making insurance topics easy to understand for people and helping them make better financial decisions. When not writing, you can find her reading a book or watching anime.
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Reviewed by:
Laura Longero
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Executive Editor
Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.
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Understanding total loss and salvage titles

A car is considered totaled when the cost of repairs surpasses a certain threshold of its pre-accident value, typically around 70-80%. The exact total loss threshold depends upon your state.

When this happens, the insurance company issues a salvage title, indicating the car has sustained significant damage. Salvage titles carry substantial implications, including diminished resale value and potential safety concerns, as well as insurance implications.

Reasons insurance companies deny buyback requests

There are several reasons why an insurance company might refuse to let a policyholder buy back their totaled car. These reasons generally fall into three main categories: safety concerns, financial implications and legal/regulatory issues.

Safety concerns: One of the primary reasons insurance companies deny buyback requests is the risk associated with driving a previously totaled car. Even if repairs are possible, there is no guarantee that the vehicle will be restored to a safe and reliable condition.

Insurance companies are wary of potential liability issues if the repaired vehicle is involved in future accidents due to residual damage. They prioritize the safety of the driver and others on the road, which leads them to restrict the sale of these vehicles.

Financial implications: Allowing a policyholder to buy back a totaled car can be problematic for insurance companies. The cost of repairs often exceeds the vehicle’s value, making it an unwise financial decision.

Additionally, insurance companies may face potential losses if the vehicle, after being repaired, incurs more claims due to its compromised condition. By refusing buyback requests, they aim to mitigate these financial risks.

State laws: Legal and regulatory issues also significantly influence an insurance company’s decision. Different states have varying laws and regulations regarding salvage vehicles; some may have stringent requirements for repairing and re-registering a totaled car. Insurance companies must comply with these laws to avoid legal complications. For instance, in Illinois, drivers typically cannot retain possession of a vehicle once it has been declared a total loss.

Alternatives to buying back your totaled car

If an insurance company refuses your buyback request, consider exploring alternatives. One option is to purchase a similar vehicle with the compensation received from the insurance company. It ensures that you have a reliable and safe mode of transportation. Consider repairing the car independently to ensure all safety standards are met.

Read on to find out if you should consider buying back your totaled car

The bottom line

A car insurance company might not allow you to buy back your totaled car for several reasons. Insurance carriers must ensure that cars on the road meet safety standards, and they may not want the responsibility of a car that could pose risks. 

Additionally, state laws and insurance policies can restrict the sale of totaled vehicles. Besides, the company may determine that selling the car for salvage or parts is more economically beneficial. 

Resources & Methodology

Sources

  1. Kelley Blue Book. “Totaled Car” Accessed August 2024. 
  2. Illinois Department of Insurance. “Illinois Insurance Facts.” Accessed August 2024.  

Laura Longero

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Laura Longero

Executive Editor

Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.

John McCormick

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John McCormick

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John is the editorial director for CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, John was a deputy editor at The Wall Street Journal and had been an editor and reporter at a number of other media outlets where he covered insurance, personal finance, and technology.

Leslie Kasperowicz

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Leslie Kasperowicz

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Leslie Kasperowicz is an insurance educator and content creation professional with nearly two decades of experience first directly in the insurance industry at Farmers Insurance and then as a writer, researcher, and educator for insurance shoppers writing for sites like ExpertInsuranceReviews.com and InsuranceHotline.com and managing content, now at CarInsurance.com.

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Contributing Writer

Shivani Gite is a personal finance and insurance writer with a degree in journalism and mass communication. She is passionate about making insurance topics easy to understand for people and helping them make better financial decisions. When not writing, you can find her reading a book or watching anime.