Jessica Sautter has a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around auto insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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Reviewed by Natasha McLachlan
Content Writer Natasha McLachlan

UPDATED: May 24, 2021

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Accidents happen every day. Many car accidents range from fender-benders up to totaling the car or truck you are driving. If your vehicle is totaled, then the insurance company will not pay for it to be repaired, but instead, pay a pre-designated sum of money to you.

How Insurance Companies Determine If A Car Is Totaled?

totaled car insurance payout

When you are involved in a road accident, or your car is, then it is the responsibility of the insurance company to repair the car and compensate you using your insurance cover. However, things are not always this simple.

There are calculations to be made and amounts to be determined before an insurance company can decide whether to repair or to declare it a totaled car.

A totaled car basically means that it is beyond repair.

The insurance company takes the wreck and sells it to the wreckage companies. If your vehicle is declared totaled, then you will have to sit down with the insurance agent so you can determine how much you will get after the sale.

So, how exactly do insurance companies value a totaled car?

It all depends on the price of the car and how old the car is. If your car is not that old, say maybe two years old and is from a renown brand then they will most likely set it as a high-value car. This means that they will be expecting the wreck to sell for a good amount of money.

The insurance company will remove your deductible and all the costs for the transaction of the wreckage. They will also put into consideration how much a new car will cost. Additional subtractions will be made in accordance with the taxation and registration in the particular state. This is what will reflect on the final amount you are given.

During the sale of the wreckage, the market price of the car during the time of the accident will also be a determining factor.

It is best to always be aware of the determining factors so as to be able to negotiate properly with the insurance company.

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If Your Car Is Totaled, How Much Does Insurance Company Pay?

if a car is totaled what does insurance pay

The totaled car insurance payout will depend on the fair market value of the vehicle at the time it was wrecked and not when you made the purchase. It is fairly typical that your insurance company will want to pay as low as amount as possible based on the following factors;

In addition, if there is something rare or unique about the vehicle such as the color combination, trim level, or if it is a special edition then it may be worth more than the standard fair market value. You will need to make sure that everything is taken into account before accepting the insurance value of the totaled vehicle.

Keep in mind that…

The deductible on the policy is subtracted from the total amount for the vehicle. So, if you have a deductible of $500, then you will receive the fair market value minus that amount.

What To Do With A Totaled Car And No Insurance?

Totaled Car and Insurance

Things become quite complicated if you have totaled your vehicle and had no insurance. For those with older cars or trucks that they own outright, you will simply not get paid because no company is providing coverage. You may have to answer to the authorities if you live in a state that requires insurance, and your vehicle was totaled on a public road.

Find out here if your state needs a mandatory car insurance.

When you have a car loan..

However, if you did not own the vehicle outright and instead purchased it through a loan that has yet to be paid off, then you may be in serious financial trouble. The insurance company will demand that they get the full market value of the vehicle from you and possibly sue for breach of contract. Also, driving without insurance is illegal in most states, and your driver’s license may be suspended for up to a year, and you will have to pay fines which mean that you may be out of a lot of money.


You may be protected somewhat if your insurance only lapsed recently. In many cases, missing an insurance payment by a few days will not result in having your coverage disappear. Of course, you will need to talk to your insurance company and make the payment immediately.

The Bottom Line:

In the end, a totaled vehicle may not be something you want to face, but your insurance company will pay out the fair market value for it. Be sure to discuss with them any special features that may have increased the value of the vehicle so you get the most for it. For older cars, the amount you make should be a good down payment on the next vehicle you purchase.