Can I keep my car if the insurance company totals it?

For many people, the term “total loss” invokes an image of a vehicle that has been destroyed. If you are one of them, you may be asking yourself two questions: “Can I keep my car if the insurance company totals it out?” And, “Why would anyone want to?” Of course, the answer to both questions depends on where you live and your personal preferences.

Can I keep my totaled car?

In many states, the owner of a totaled vehicle can retain the car, but they are usually required to obtain a new title. However, some states have laws restricting what owners can do with vehicles with a salvage title.

For example, driving a salvage vehicle on public roads may not be legal. Most insurance companies may not even offer auto insurance for salvage vehicles. In some states, you can get the car retitled after making repairs. In other states, the only thing you can do with a salvage vehicle is to sell it or use it for parts, while some laws won’t allow you to retain a salvage vehicle for any purpose.

If you’re thinking about keeping your car, talk to your insurance company or another professional who knows the laws in your state first. Otherwise, you may find out you can’t legally use the car for your intended purpose or that the legal hoops you have to jump through to keep the car may not be worth the trouble.

Why would I want to keep my totaled car?

There are three main reasons you may want to keep your totaled car:

• You want to fix it. If you don’t think you can purchase a comparable vehicle with the money from your total loss settlement, you may prefer to keep your totaled car and get it fixed.
• You want to sell it for parts. If you think you can get more money out of your totaled vehicle by selling it for parts yourself, you may want to keep it instead of accepting what the insurance company says the salvage value is.
• Your car has sentimental value. Some people love their cars. If you are one of these people, the sentimental value of the car may be worth more to you than the financial value. 

If any of these reasons apply to you, compare the value of keeping your car versus the cost of not keeping it. Keeping the totaled car may cost more than you think to repair the damage, and if you intend to part the car out, you may not get as much money selling the parts as you anticipate. It is important to consider these factors before you decide to keep your vehicle. Find out what the insurance company does with your totaled car.

What happens if the insurance wants to total my car, but I want to keep it?

If you decide to keep the car, and it is legal for you to do so in your state, the insurance company will offer to pay you an amount equal to your total loss settlement minus the salvage value of the vehicle.

If you agree, the insurance company will return the car to you and issue you a check for the agreed-upon amount. You will be responsible for obtaining a salvage title if the laws of your state require it.

What if I still owe money on my wrecked vehicle?

If you still owe money on your wrecked vehicle, the insurance company will pay the value of your total loss settlement to your lender. If the settlement exceeds the amount that you owe, the lender will reimburse the difference to you. If you still owe money, you must finish paying off the car unless you have GAP insurance.

How does the total loss claims process work?

Most insurance contracts specifically state that the maximum amount the company will pay for a physical damage car insurance claim is the vehicle’s actual cash value, minus your deductible. Therefore, if the damage to your vehicle exceeds this amount, the insurance company is not obligated to pay the additional cost. To calculate the value of a totaled car, car insurance companies use a totaled car value calculator.

However, when a vehicle is totaled, your insurance company will offer you a settlement for the salvage value of the car. The salvage value is what your car is worth after it’s been totaled. A damaged vehicle is often considered a total loss when the cost to repair the damage exceeds 70% of the average retail value of the vehicle. Once the insurance company has determined that your vehicle is a total loss, it will offer you a settlement amount based on the vehicle’s actual cash value. Find out how insurance companies determine car value.

If you accept the offer, the insurance company will ask you to complete paperwork that confirms your acceptance of the settlement and transfers ownership of the salvage vehicle to the insurance company. If you decide to keep your totaled vehicle, you are only entitled to the difference between the current value of your wrecked vehicle and the pre-loss value of the vehicle.

What if I disagree with the insurance company’s offer?

Most insurance companies are willing to negotiate total loss settlements. However, if you think your car is worth substantially more than the insurance company has offered, you need to provide supporting documentation to substantiate the value you are asking for.

Examples of documentation that may help your case include receipts for any aftermarket equipment you have installed and sales records for similar vehicles in your geographic region. 

If you can’t reach an agreement with the insurer, you may need to consider if the matter is worth pursuing in court. Additionally, if you are dealing with your own insurance company, there may be an arbitration clause in the contract that applies.

Keeping Your Totaled Vehicle: The Bottom Line

If the laws of your state permit it, and you think it makes sense for you to do so, you have the right to keep your car if the insurance company totals it. However, because of the potential consequences, it is important to weigh the advantages and disadvantages before making your final decision.