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Totaled Car Coverage

Dana George
By: Dana George

Our Insurance Expert

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According to the Bureau of Transportation Statistics, approximately 13 auto accidents occur in the U.S. every 60 seconds. Ultimately, that amounts to around 6.75 million accidents a year. Although some of those crashes are fender benders, others are more serious, leading to totaled vehicles and injuries. Here, we explain how and when a car is considered totaled and how drivers can find out if they have coverage for such an event.

What is a totaled car?

An auto insurance company considers a car "totaled" when the cost to repair the damage exceeds the vehicle's book value. Insurers turn to valuation sources like Black Book and Kelley Blue Book to determine a car's value. If its chosen source indicates that the car is not worth the money it will take to make repairs, it is declared totaled.

And here's why that matters: It's entirely possible that a driver's car insurance company will pay less than expected for a totaled car.

What type of insurance covers a totaled car?

All car insurance policies are not created equal. Some cover more than others. These policy options can cover a totaled car.


Whether a vehicle is totaled by a fire, weather-related event, vandalism, or theft, comprehensive car insurance coverage will pay the value of the car minus deductible.

When it kicks in: In the event damage occurs when the car isn't being driven.


No matter what a car collides with -- another vehicle, guardrail, tree, or building -- collision insurance will cover the car's value, regardless of who's at fault. All the driver is responsible for is their deductible.

When it kicks in: When the car is being driven, and the accident was the driver's fault.

Uninsured motorist property damage (UMPD) and underinsured motorist property damage (UIMPD)

If another driver is at fault for an accident that totals a vehicle, UMPD/UIMPD can cover the car up to the amount specified on your policy rather than the vehicle's actual value. The limit chosen by a driver when purchasing the policy determines the maximum the insurer pays. If you're concerned, check your policy to ensure the limit is high enough. If not, give your insurance agent a call to increase the limit.

When it kicks in: When another driver is at fault, and they're either uninsured or underinsured.

Gap insurance

Gap insurance covers the difference between what the driver owes on a vehicle and its actual worth. Let's say a driver owes $40,000, but the vehicle is worth $30,000. Without gap insurance, the insurance company would pay $30,000, and the driver would be responsible for the remaining $10,000. With gap coverage, the insurance company pays the entire $40,000 (or up to the insurer's gap policy limit).

Remember that different insurance companies carry other limits on how large a gap they'll cover. For example, Progressive covers up to a maximum of 25% of the actual cash value of a car. In this scenario, the vehicle has a cash value of $30,000. That means Progressive would cover 25% of $30,000, or $7,500. That would leave the driver responsible for the remaining $2,500 gap between the $40,000 owed and $37,500 covered by insurance.

Your best bet is always to compare top car insurance providers to learn which offers the most generous gap coverage.

When it kicks in: When a driver owes more on a vehicle than its current cash value.

How much will insurance pay for a totaled car?

An insurer will pay the owner the car's fair market value, also known as actual cash value, minus the policy deductible. For example, if a driver could have sold the vehicle the day before the accident for $30,000, that's how much the insurance company will pay once it's totaled. They don't consider how much it will cost to replace the car or how much the driver borrowed.

When insurance might not pay for a totaled car

Ideally, if you ever need insurance coverage, your policy will perfectly coincide with your needs. However, that's not always the case. Here are two examples of when insurance may not cover a totaled vehicle.

When the driver owes more than the cash value on the car

As mentioned, an insurer will only pay a driver the amount the car was worth before it was totaled. Drivers who owe more are responsible for the difference unless they have gap coverage.

When the vehicle is leased

Before comparing auto insurance rates, drivers should ask which coverages the leasing company requires. To protect its interest, a leasing company will often require drivers to carry extra coverage, like UMPD and UIMPD, in addition to a standard policy. It may also require a driver to have personal injury protection (PIP). A leasing company will almost certainly insist on collision coverage, comprehensive coverage, and often even gap insurance.

In other words, the leasing company wants to ensure drivers have enough coverage to pay for the entire amount owed if the leased vehicle is totaled.

Steps to take when your car has been in a serious accident

Emotions can run high following a car accident, making it especially important to have a plan in place before an incident takes place.

Make sure nobody is hurt

Check the occupants of your vehicle and, if you're able, the other vehicle (if the accident resulted from a collision). If anyone is hurt, call 911 for assistance. Nothing matters more than making sure everyone gets the medical attention they need.

Call the police

Even if no one is hurt, you must make a 911 call to the police. Even if the other driver asks you not to involve the police, law enforcement must be called. Not only will your insurance company want a copy of a police report, but law enforcement has enough experience to decide which party was at fault.

Obtain the other driver's insurance information

If another driver was involved, get their personal information, including their name, address, and phone number. Also, take down their auto insurance details. If they appear unwilling to share with you, wait for the police to gather the necessary information.

Call your insurance company

Let your insurer know what's happened and ask if there's anything specific the company would like you to do. Then follow its instructions.

Have your vehicle towed to a repair shop

You'll need to wait until a mechanic can assess the damage and determine how much repairs will cost. Your insurance company may require several estimates.

Take a look at your insurance policy

Even if the other driver was at fault, your policy might include perks to help you get back on the road faster. For example, you may have rental vehicle coverage that can quickly provide another set of wheels.

Pay off your existing auto loan

Once an insurance company has settled with you, the money must go directly to the vehicle's lien-holder.

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  • The insurance company will turn to a valuation source to determine how much the vehicle would have sold for before it was damaged.

  • It's worth whatever amount the insurance company can sell it for to a salvage buyer.

    The vehicle is worth the amount it would have sold for right before the car was damaged.

  • Unless a driver has gap coverage, they are responsible for the difference between what they owe and the amount the insurance company will pay.

  • Yes. Gather evidence if you believe your vehicle is worth more than you're being quoted. For example, if you've added high-end equipment, you must let your insurer know how much you've spent.

  • Your insurer will share the value with you and tell you how it came up with the number.

Our Insurance Expert