What is Totaled?
A vehicle is considered “totaled” when the damage from an accident or incident is so extensive that the cost of repairs surpasses a significant portion of the vehicle’s market value. In most cases, insurance companies use a percentage threshold—often around 70% to 80% of the vehicle’s value—to determine if it should be classified as a total loss.
When a car is totaled, the insurance company typically reimburses the vehicle’s owner for its current market value minus any deductible. This can vary depending on the type of car insurance coverage, such as comprehensive or collision. In some cases, the insured may have the option to keep the vehicle, but this might require accepting a reduced payout.
For example, suppose you’re involved in a severe accident that severely damages your vehicle, and the repair costs exceed the car’s current value. In that case, your insurance company might declare it totaled. In this case, the insurance company would compensate you for the car’s value before the accident, helping you replace the vehicle.
Totaling a car also has implications for determining future insurance premiums. Driving habits and the cause of the accident can influence how premiums are adjusted after a totaled claim.