Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jul 14, 2021

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In a nutshell...

  • Several factors may prompt an insurance company to declare your car a total loss
  • Your insurance company will pay the retail market value for the totaled car
  • You can challenge the insurer’s decision to write off your car

An insurance company might label your car a total loss if the cost to repair it to its pre-damaged state surpasses the vehicle’s actual cash value or worth.

Even though insurers follow certain state laws, they are also allowed to set their own guidelines for totaled vehicles.

What this means is that an insurance company can write off your car even if it only suffered minor damage, probably a small dent or a few scratches.

According to different state laws, a vehicle has to incur a particular percentage of destruction before it is deemed a total loss.

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What is a write-off?

A car write-off is a reduction in the value of earnings and only happens when the vehicle has been damaged beyond repair.

Whether a car is a write-off depends on various factors such as:

  • The car’s particular condition
  • Can it be repaired safely?
  • Will the cost of repair exceed its worth?

After being declared a write-off, the car is kept by the insurance company and you are given a cash payout as compensation for the loss.

Usually, this is the vehicle’s actual cash value, its fair market price before the damage.

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What Your Car Insurance Company Owes You

As stated above, the insurance company owes you the retail market value of the totaled vehicle.

If the two of you can’t agree on the best way to calculate the retail market value, then the insurer will have to follow the write-off rules defined in state regulations.

According to these rules, the insurer is allowed to use one or more of the below methods to ascertain the value of your vehicle:

  • Offer cash settlement depending on the retail market value of similar vehicles in your local area
  • Offer to replace the car with a comparable and available car in your local area
  • If the two of you agree, the insurer may also use other appraisal techniques, like independent auto-value guides

If the insurer is unable to find comparable vehicles in your area, they may expand their search within 25-mile increments until two or more similar vehicles are found.

Note that any license fees, applicable taxes, and other costs needed for ownership transfer will be added to the car’s actual cash value.

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What if you and the insurer do not agree on the value of your car?

If you and your insurance company cannot agree on the value of your car, then you are allowed to hire an appraiser through the appraisal provided in your auto policy.

Try negotiating the actual car value with your insurer using the below negotiation approaches:

  • Find out exactly how the insurance company calculated the actual cash value (ACV). Your agent can offer a step by step explanation on the same
  • Check the Kelly Blue Book value yourself. The KBB is an excellent place to start ascertaining the actual cash value of your car Knowing the KBB value and current sale prices for cars comparable to yours will help you when negotiating the ACV with your insurer
  • Search for the comparable vehicles yourself. You might have to go to used car dealerships or websites; look at the conditions of the cars and their prices

What if the disagreement is between you and the other party’s insurer?

If the other person is the one at fault and you are unable to agree with his/her insurer on the ACV of your car, you can file a complaint with your insurer if you have collision coverage.

In the event that you lack the collision coverage, it is advisable to seek legal advice.

Your insurer can then follow up with the at-fault individual for reimbursement, including any deductibles paid by you.

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What if you don’t want your car to be written off?


What you need to remember is that the insurance company will not take possession of your vehicle until you agree to take the settlement figure.

If you don’t feel the insurer’s proposal is a true reflection of the value of your car, then contact them and file a claim.

You can include any information on the vehicle’s service history and any other thing that could have an impact on its value.

Remember, the payout depends on the value of your car before the damage, so don’t expect to get the price you originally bought the car.

If you decide to keep your vehicle after the sales tax, actual cash value and applicable prorated fees and taxes are added together; the insurance company will deduct the salvage value from your total settlement.

How do you obtain a salvage title?

A vehicle that is deemed a total loss is called a salvage vehicle. The owner of such a car can decide to repair it and get a salvage title that will enable him/her to register, operate, and even sell the vehicle.

It is also good to note that not all insurers accept to insure a salvage car. Insurance companies have all the rights to declare your car a total loss.

As much as you can oppose this decision, it is wise to assess the actual condition of your vehicle before deciding on which option is best for you.

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