You’re not alone if you’ve been in a car accident and totaled your car. In 2022, private passenger auto insurance companies had nearly $118 million in incurred liability losses in the U.S., and another $91 million in physical damage losses, according to the Insurance Information Institute.
Find out how an insurance company will determine if your car is a total loss.
- Keeping your totaled car can save you money, but it comes with some potential headaches.
- Insurance company rules and state laws help determine when a car is totaled.
- Buying back a totaled car is relatively cheap in many cases, but it can have some drawbacks.
When is a car considered total loss?
An insurer generally considers a car to be totaled when the cost of fixing the car exceeds its value.
Some states also have legal definitions that determine when a car is considered to be totaled. For example, Alabama law states that a vehicle is considered to be totaled when the damage exceeds 75% of the car’s value.
In most cases, your insurance company will send a representative to look at the vehicle before declaring it a total loss.
“Insurance companies will consider the current value of your car, the age, condition and whether the cost to repair outweighs the cost of your vehicle,” says Carole Walker, executive director of the Rocky Mountain Insurance Information Association.
Depending on the nature of the damage, you might be reimbursed for the car’s current market value if you carry coverages such as comprehensive and collision.
If you do not carry these coverage types, you will likely not be reimbursed.
Can you buy back your car from your insurance company?
After an accident, your insurance company will likely use the total loss formula in your state, which determines whether the cost of the repairs and scrap value of the car is equal to or greater than the actual cash value, or ACV, of your car before the crash.
If it is, your car will be totaled. If the cost to repair your car is less than the ACV, your insurance company will repair it.
Typically, after the settlement is paid for a vehicle that is found to be a total loss, the damaged car goes to an auction or salvage yard, where it is auctioned to the highest bidder and used for parts. The insurance company keeps the proceeds of this sale.
Many insurers will allow you to “buy back” a vehicle they have totaled out if you wish to repair it and make it roadworthy again. If your insurer allows you to do this, you must inform your insurer immediately that you want your car back.
Once the vehicle goes to the salvage yard, you will have little chance of getting it back, since only licensed auto salvagers are typically allowed to attend these auctions.
If you want to keep your damaged vehicle, some insurance companies will forgo the auction process and turn the car over to you. They will still have to pay you the actual cash value of the car but may deduct the amount the car would have brought at auction, which is known as the salvage value.
Learn why an insurance company might not let you buy back your totaled car
Should you buy back your totaled car?
It depends. Even if your insurer allows you to buy back the car, it might not be worth the time and expense to get it back on the road if your state has a number of special requirements you must satisfy, such as getting a salvage title or having the car inspected after it’s been repaired.
If the damage is only aesthetic or if the car has sentimental value, you could consider buying it back. But remember that having a salvage title will seriously impact your ability to sell the car. Additionally, you might find damage down the line that you hadn’t anticipated.
In many cases, you will be on the hook for the repair cost if any future damage occurs because you’ll likely only be able to get liability insurance coverage. Insurers are much less likely to offer collision and comprehensive coverage on a car that has been totaled.
Also, some insurance companies will not insure a vehicle with a salvage title, so it might be difficult to find insurance for the vehicle now that it has a salvage title. Your best bet will be staying with your current insurer since the insurer knows what’s wrong with the car.
Learn what to do with a totaled car
Pros and cons of keeping a totaled vehicle
There are both pros and cons to consider if you decide to keep your totaled car.
On the pro side, some older cars that are totaled might have relatively minor damage.
Remember, cars lose their value fast, especially during the first few years they are on the road. That means that even significant cosmetic damage can make a car not worth repairing if it is several years old.
So, it is possible that even after the car is totaled, you can drive it without worrying about any mechanical issues. You will get a check for the totaled car, but still be able to continue to drive it.
People who love cars also might want to keep their totaled car so they can harvest it for parts.
There are also potentially significant cons to keeping a totaled car. Once you repair a totaled car, it must face an inspection — and pass it — before you can insure and legally drive it.
Totaled cars also generally have salvage or rebuilt titles that lets people know the car has been declared a total loss. This can often make it more difficult to secure car insurance for the vehicle.
Which states allow you to buy back your vehicle if it’s totaled?
Your state’s laws determine whether you can buy back a vehicle from an insurance carrier once it’s been declared a total loss. For example, states like Illinois do not allow you to keep a vehicle after it has been declared a total loss.
For example, in Illinois, a driver cannot usually keep a vehicle after it has been declared a total loss.
If your state does allow vehicles that have been totaled out to be bought back by individuals (and then given either a salvage title or rebuilt title), then the guidelines of the insurance company would determine whether it would sell you back the car and how the company would figure out the salvage value of the vehicle.To learn about your state’s laws regarding buying back a totaled car, contact your state’s insurance regulatory body or Department of Motor Vehicles.
Learn more about how to insure a salvage or rebuilt title car.
How much does it cost to buy back your totaled car?
Typically, the cost of buying back a totaled car is low. Your insurance company will first take your car’s current fair market value. Next, it will deduct the amount it would have recovered from selling the vehicle to a salvage yard.
Finally, it will subtract any deductible you owe. At that point, whatever money is left over will be issued to you in a check.
Remember, once you get your totaled car back, you must repair it and bring it in for an inspection. So, factor those costs into your calculations before deciding whether keeping your totaled car makes sense.
What’s a book value of a car?A car’s book value is its current value in the marketplace. The value of a car typically falls fast, particularly in the first few years of ownership. The decline in value is known as depreciation. Since 1926, Kelly Blue Book has been the gold standard for determining a vehicle’s current book value.
How is salvage value determined?
The insurance company determines the salvage value you would owe the insurance company (or have taken out of the settlement amount). There is no universal formula for the salvage value of a particular vehicle – it depends upon the car, the damage and the vehicle’s current market value.
The salvage value is the amount of money the insurer would recoup when selling the vehicle through a licensed salvage vendor. So, instead of selling it to a salvage vendor, they allow you to buy your car back, get the needed repairs and drive it again.
The buy-back amount (salvage value) is the car’s worth in the condition it is in with the damages it sustained in the accident. If you wish to buy back a car from an insurance company that deemed your vehicle a total loss, research the value of the car and the cost of buying it back.
Check around with local salvage yards to ensure the salvage value the insurance company quoted you is accurate for your vehicle.
Learn whether you have to pay taxes on your insurance settlement.
Final thoughts: Buying back a totaled car
If you have gap coverage (which pays the difference between actual cash value coverage and the balance on your loan) or new car replacement coverage (replaces your vehicle with a comparable one), you might want to avoid the hassle of dealing with a totaled vehicle and salvage title.
On the other hand, if you want to buy your totaled car back from the insurance company, ask yourself whether you’re willing to keep the car regardless of its resale value and the fact that you’ll only be able to insure it with liability coverage.
People Also Ask
Can I drive a totaled car?
If your car’s damage is purely aesthetic, you may be able to drive it. You’ll need to get a salvage title to drive a totaled car.
Will your insurance company let you buy back your totaled car?
Many insurers will allow you to buy back a vehicle they have totaled if you wish to repair it and make it usable again. If your insurer allows you to do this, you must inform your insurer immediately if you want your car back.
Once it goes to the salvage yard, you will have little chance of getting it back since only licensed auto salvagers are typically allowed to attend these auctions.
An insurance company might not let you buy back your car if the car is a safety hazard or if the cost of repairing exceeds the actual cash value of the car.
Can I buy back my totaled car for salvage price?
If you want to buy back your totaled car for salvage price, you will need to check with your claims adjuster to see if they will allow you to buy back your car. Getting a salvage title is generally hard to do.
Resources and Methodology
Sources
- Insurance Information Institute. “A Firm Foundation: How Insurance Supports the Economy.” Accessed February 2024.
- Statista. “Motor insurance in the U.S. – statistics & facts.” Accessed February 2024.
- Insurance Information Institute. “Facts + Statistics: Auto insurance.” Accessed February 2024.
- Illinois Department of Insurance. “Illinois Insurance Facts.” Accessed February 2024.
- Kelley Blue Book. “Totaled Car: Everything You Need to Know.” Accessed February 2024.
- Kelley Blue Book. “What Is Car Value?” Accessed February 2024.
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