Why Is My Car Now “Totaled” if it Runs?

You have probably heard the phrase “totaled” before, as in “That accident totaled my car.” You may have even experienced it for yourself. However, what many drivers may not realize is that a car doesn’t have to be irreparably destroyed to be considered a total loss – and you may be unpleasantly surprised by your insurance company’s decision to total a car that can still drive.

Tow TruckWhat Total Loss Means

“Totaled” doesn’t mean that a vehicle cannot repaired. It means that repairing it would not be worthwhile from a financial standpoint. This is most common with older vehicles whose value has depreciated. Once repairs cost nearly the vehicle’s worth, the insurance company will opt instead to declare it a total loss and pay you the actual cash value of the car less any deductibles.

In some cases, a car is an obvious total loss. However, some situations can total a car while leaving it completely drivable. For example, hail damage is largely cosmetic, but if it affects every body panel of the car, you could be looking at a total loss. Another situation is theft: If a car is recovered after the insurance company pays the settlement, the car becomes the property of the insurance company.

What to Do With the Car?

Once a car is declared a total loss, it’s picked up by the insurance company and generally sold to a salvage yard. The car’s owner will be given a settlement check equaling the car’s actual value minus the deductible.

However, if the car still runs, you have the opportunity to buy the vehicle back from the insurance company. You will generally need to make an offer equal to what the salvage yard would pay. You would then receive the vehicle on a salvage title.

Cars with salvage titles are generally legal to drive, although you may not be able to get full coverage insurance on them. You may also face difficulties in re-selling the vehicle on a salvage title. However, if the damage is cosmetic, buying back the totaled car might be a cost-effective strategy. It depends on the exact situation and your individual preferences and needs.