What Happens When Your Car Is Totaled and You’re Not At Fault?


Receiving a satisfactory totaled car insurance settlement in an accident that wasn’t your fault, might depend on the policy limits of the at-fault driver, your own collision and comprehensive coverage, and the insurance company’s estimate of the actual cash value (ACV) of your vehicle.

It's bad enough the accident wasn’t your fault. Now the car you sacrificed to buy is declared a total loss. Small wonder if you feel victimized all over again.

Beyond the immediate and obvious concerns about transportation for your daily commute, or what seems like a 24-hour Uber service for your kids, you must deal with the challenges associated with expensive body shop estimates and stingy insurance companies.

In general, insurance companies can declare a car a total loss if the cost of repairs exceeds the value of the vehicle. Under some state laws, insurance companies must declare a car a total loss if the cost of repairs falls within a certain percentage of the actual cash value (ACV) of your vehicle.

So, what looks like a repairable car to you might not pass muster with an insurance adjuster.

Bottom line: if your car is declared a total loss, you need to know how to proceed to ensure your chances of receiving a settlement that doesn’t further complicate your life or your finances.

How to Determine If a Car Is Totaled

The general formula insurance companies use in declaring a total loss is if the estimated repair costs exceed the value of the car. That value isn’t what you paid for the car, even if it was a recent purchase or the vehicle was brand new when you bought it. It’s the depreciated value.

In some states, the repair costs don’t have to exceed the actual cash value. If the repair costs are just a certain percentage of the ACV – 70% is a common threshold – the insurance company is required to declare it a total loss.

In Ohio, a car is declared a total loss if the value of repairs plus the salvage value of the car exceed the actual cash value.

Regardless of the state, the ACV is the pre-accident market value that takes into account a number of factors:

  • Mileage: How many miles has it been driven?
  • Wear and tear: What is the condition of the car? Does it have issues under the hood?
  • Market trends: Is a certain make and model in demand?
  • Salvage value: What the car parts could bring if sold at salvage.

Kimberly Koehler, a personal injury attorney with Radna Law in New York, recommends drivers be diligent to protect their interests.

“Obtain an itemized statement from the mechanic concerning the damage to your car,” Koehler said. “Look up the blue book value if your car is a total loss and make sure that you receive the blue book amount as well as the taxes on the value.

“Also, it is important to review your auto insurance policy as well as obtain and review a copy of the other driver’s auto insurance policy. Understanding the terms of your insurance policy will allow you to determine whether you’re entitled to be reimbursed for certain expenses in connection with your accident.”

Whose Insurance Pays for a Totaled Car?

Just because you weren’t at fault doesn’t mean you can take an innocent bystander role in the claims process.

You should immediately report the accident to your own insurance company, after which in most states you would file a claim with the at-fault driver’s insurance.

Determining fault in a car accident can be a complicated and laborious process but for the sake of argument let’s say you were rear-ended at a red light. The at-fault driver’s insurance company would pay for the damages up to that driver’s policy limits and the determination of your car’s actual cash value.

In no-fault states, each driver is required to file a claim with their own insurance company regardless of fault.  Each driver’s personal injury protection (PIP) coverage pays for respective medical costs and lost wages.

Drivers in no-fault states still must cover damages they cause, if they are at fault in an accident.

Insurance Options When Your Car Is Totaled

The best avenue for recovering damages in a totaled car settlement depends on the circumstances involved in your claim.

Was your car totaled in an accident with an at-fault driver? Was that driver underinsured, or not insured at all?

Was your car declared a complete loss in a one-car accident? What if the reason your car is no longer salvageable is because of a tree toppled in a storm?

Depending on the situation, you could be filing a third-party claim with the at-fault driver’s insurance company or using your own collision or comprehensive insurance to make yourself whole again.

And even then you could end up paying out of pocket if, for instance, you owe more on your car loan than what you receive in a totaled car insurance settlement.

Liability insurance

Drivers are legally required to carry liability insurance in most states. Liability insurance is your protection if you’re found at fault in an accident since it helps cover (up to the policy limits) an injured person’s medical bills and repairs to another driver’s vehicle.

If you’re not at fault in a car accident with another driver, that at-fault driver’s liability coverage typically pays for your losses.

Collision Coverage

If you’re leasing or financing a car, collision coverage is required. Collision coverage helps pay to repair (or replace) your car if it’s damaged in an accident with another vehicle, if the at-fault driver’s liability insurance doesn’t cover your losses.

It also protects you if you’re involved in a one-car accident with an inanimate object, or an accident with a hit-and-run driver. Collision coverage is optional if your car is paid off.

Comprehensive Coverage

Comprehensive coverage protects you against damages sustained in non-collision events beyond your control: fire, acts of nature, theft, vandalism, etc.

Uninsured Motorists Coverage

You know you’re not at-fault in a car accident because you were rear-ended at a red light. But that doesn’t help when you learn the other driver is uninsured.

Uninsured motorists coverage helps pay for medical expenses if you’re involved in an accident with an uninsured driver. Some states also offer uninsured motorist property damage insurance to pay for damages sustained in an accident.

How Much Will Insurance Pay for a Totaled Car?

Coverage limits make a difference. The at-fault driver who ruined your day (your week, your month) may carry a property damage limit on their insurance policy that’s less than the actual cash value of that new SUV you just bought.

Insurance companies first determine liability. Then they assess the costs associated with that liability. But how much insurance pays for a totaled car still depends on the coverage.

Insurance companies pay up to the policy limits. So, car insurance coverage is worth your scrutiny since it can limit the amount of a settlement if the damages are greater than the policy limits.

» More About: What Happens If Insurance Claim Exceeds Policy Limits?

Negotiating a Total Loss Payout

 If you have court-room skills, good. You’ll need them.

While it’s possible to negotiate a total loss payout with an insurance company, your success will likely depend on you making a convincing case built on extensive research.

“You must keep track of all expenses you incur as a result of the accident, such as rental car expenses, transportation such as Uber expenses,” Koehler said. “(Also) items that were within your vehicle that were destroyed as a result of the accident and any other expenses you incur.”

Did you make substantial upgrades to your car before it was totaled? This is a good time to show pictures (and receipts.) Recent sales of similarly appointed cars and/or current sales prices on your favorite websites might come in handy.

But what might prove even more valuable, depending on your situation and the totaled car settlement you’re offered, is an accident attorney who negotiates these matters for a living.

FAQs About Totaled Cars

You get it if your car is paid off and you own it. The finance company gets the insurance check if you are still paying on it. You would receive the difference (if there is one) once that loan is satisfied.

Typically, you wouldn’t pay a deductible if you’re not at fault in an accident that totals your car. If you’re at fault for the accident or fault has yet to be determined, you’d pay the deductible before your policy’s collision coverage kicks in.

If you’re not at fault, the at-fault driver’s liability insurance should pay for damages to your car. The policy limits of the at-fault driver could still leave you short though. If you don’t have collision or comprehensive coverage and your car is totaled in a one-car accident or non-driving event, you’d have to pay to replace your car.

A totaled car does not affect your credit. An exception would be if you still owe money on a totaled car and stop making payments while the settlement process plays out. The loan stays on your credit report until the balance is zero.

Insurers will pay only the actual cash value of a totaled car. If you owe $20,000 on a car that’s totaled and the insurer determines the ACV at $18,000, you typically must pay the $2,000 out of pocket to pay off the loan.

If you carry gap insurance, your policy would kick in to pay the difference between the loan payoff and the ACV. If you don’t have gap insurance and the ACV leaves you upside down on your loan, sometimes dealers will allow you to fold the amount you owe into the new loan you take out on a replacement vehicle.

You can tell the insurance company you want to keep a totaled car and pay for repairs with the insurance settlement. But insurers will likely deduct the value they’d receive in salvage from the actual cash value payment due you.

Depending on the damage, you might have trouble getting your car insured after repairs, so be careful about keeping a car the insurance company declares totaled.

Car insurance settlements can be complicated. Double for an accident that leaves you without transportation and financially short.

Knowing your own insurance policy limits and state laws can at least help lessen the stress.

Robert Shaw

Robert Shaw is a writer based in Ohio who brings decades of newspaper experience as a reporter, columnist and editor to his freelance work. Shaw has written on topics as diverse as the city of Atlanta's successful bid to secure the 1996 Summer Olympic Games, to the educational challenges faced by an urban Cleveland school during the Covid-19 pandemic, to federal home buying loan programs designed to help teachers, firefighters, police and emergency personnel get a foothold in the housing market. Whatever the topic, Shaw strives to bring a sharp focus and clear understanding to the issues affecting people's everyday lives.

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