A car is considered totaled (or a "total loss") when the cost to repair it after an accident or other incident exceeds its actual cash value (ACV), or when it meets specific state-mandated damage thresholds. Essentially, the insurance company has decided it’s not financially sensible to fix the car. The most common threshold is when repair costs are between 70% and 100% of the car's pre-accident value. For example, if your car is worth $10,000 and the repair estimate is $8,500, the insurer will likely declare it a total loss.
This decision isn't just about money. A vehicle can also be declared a total loss if the damage is structural, making it unsafe to repair, even if the cost seems manageable. Once a car is totaled, the insurance company will pay you the car's ACV (minus your deductible) and take ownership of the damaged vehicle, which typically receives a salvage title.
The process and specific thresholds are regulated at the state level, leading to variations across the U.S. The table below outlines examples of different state total loss formulas.
| State | Total Loss Formula (Repair Cost vs. ACV) | Common Threshold | Notes |
|---|
| Texas | Repair Cost + Salvage Value > ACV | 100% | Uses the "Total Loss Formula" (TLF) |
| California | Repair Cost + Salvage Value > ACV | 100% | Also uses the TLF standard |
| Florida | Repair Cost > 80% of ACV | 80% | A lower threshold, more likely to total a car |
| New York | Repair Cost > 75% of ACV | 75% | One of the lower thresholds in the U.S. |
| Illinois | Repair Cost > ~70-100% of ACV | Varies | Uses a "fair market value" assessment |
After the settlement, the insurer sells the salvaged vehicle. If you wish to keep the car, you can sometimes negotiate a "retained salvage" agreement, where the insurer pays you the ACV minus the car's expected salvage value and your deductible. However, this comes with significant challenges, including the difficulty of getting it properly repaired, re-titled, and insured in the future.
