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CAR Insurance

How to obtain a title and insurance once your car is totaled, if you decide to continue to drive it.

Totaled car needing salvage titleA totaled car need not be retired to the junkyard or crushed into a cube the size of a foot locker.

With some loving tweaks, a vehicle once pronounced dead by a car insurance company may enjoy a meaningful second life on the road. At the least, it could get you where you need to go.

But making sure the car is mechanically safe is only the first step you need to take. To legally drive a car that was totaled, you will need to ensure that you have notified state authorities, obtained the appropriate “rebuilt” title, and purchased new insurance. All of this can be done easily enough.

How do I know if my car is totaled?

"Totaled" may conjure up images of a car flattened like an accordion. But this is typically not the case, particularly given the high cost of some repairs.

That’s because in the world of insurance, "totaled" is a question of math: If it will cost more to repair the car than it was worth before the crash, the car is considered totaled. And the repair costs typically need not even be that high. In Iowa, for example, state law requires that an insurance company declare a vehicle as “salvaged,” or totaled, if the repair costs would exceed just 50% of the vehicle’s pre-crash value. In nearly every other state, however, insurers can make their own determination or, where states do dictate a loss percentage, insurers are not required to declare a car a total loss unless the repair costs exceed 75% or more of the car’s pre-crash value, according to a review by Matthiesen, Wickert & Lehrer, S.C., a law firm with offices across the country.

If your vehicle is determined to be totaled, your insurer will pay you the pre-crash market value, minus your deductible. That is, as long as you have comprehensive or collision coverage on the vehicle.

Can I keep my totaled car?

Yes, in most states you can keep your totaled vehicle. If you are fully insured and you decide to keep your totaled car, your insurance company will pay you the pre-crash value of the car minus your deductible and minus the amount the insurance company would have received by selling your totaled vehicle to a salvage yard.

Is repairing a totaled car worth the effort?

You very well might opt to keep your totaled car if you think you can repair it and it will still operate safely. Consider, for example, that hail damage is primarily cosmetic but that the high costs of repair can easily total even a newer car. Or, if your car is older, that even a modest fender-bender can total it out even though the car is otherwise mechanically sound.

Remember, how much damage it takes to total a car depends on the car’s pre-market value and the cost of repairs. This is an economic determination that has little to do with whether the car is road-worthy.

Do I need to notify the DMV if my car is totaled?

If you decide to keep a car that has sustained any significant damage, then either you or the insurance company — it varies by state — must report the damage to the state's department of motor vehicles. These laws are intended to protect would-be buyers, who might otherwise be unaware of the underlying extent of the vehicle's damage.

Under the National Motor Vehicle Title Information System, established in 2008, insurance companies and salvage yards must submit information on vehicles damaged by crash, fire, flood or other calamities. The data is available to DMVs, the police, and, for a fee, to the public, as well.

Depending on the extent of the damage, the vehicle may be required to have a “salvage” or “rebuilt” title. “States have different names, descriptions and qualifications for a car to have been salvaged and then made roadworthy again. In general, we refer to this as a rebuilt title but the language by your state and insurer may be different, such as ‘reconstructed,’” says Penny Gusner, a senior consumer analyst for insurance.com.

A salvage title may be branded with different descriptions, depending on the state and the type of damage. These include:

  • Salvage
  • Flood damage
  • Fire damage
  • Rebuilt title
  • Inoperable or non-repairable
  • Total-loss vehicle

Keep in mind, however, that a car with a salvage title cannot be driven. You must obtain a “rebuilt” or “reconstructed” title before hitting the road. That will prove that the vehicle has passed a state-mandated safety inspection.

Can I insure a car that was totaled?

You can insure a rebuilt vehicle, but obtaining full coverage car insurance can be difficult, if not impossible. “Companies that write car insurance policies for a vehicle with a rebuilt title tend to offer liability only,” says Gusner. “It is harder to find an insurance provider that will offer the owner the option of adding on comprehensive and collision.”

The insurance company may want to do its own inspection first, or get a statement from a mechanic saying that the car is roadworthy.

For example, State Farm, the country's largest auto line, may insure a vehicle previously declared a total loss and issued a salvage title with comprehensive and collision coverage if the vehicle has been repaired, subject to underwriting and file development.  

“State Farm won't insure a car that State Farm itself has declared a total loss,”  says Benjamin Palmer, a State Farm spokesperson. “So if you want to stay with your current company – for instance, if you want to keep a multiline discount – and you have State Farm insurance, you may be out of luck. State Farm will, however, insure a salvaged car that has been totaled out by another insurer.”

Is it worth insuring a car that has been totaled?

Keep in mind, though, that even if you are able to find comprehensive or collision coverage the insurer will only value the car at its worth after the calamity and before repairs, making any payout far less valuable. In addition, coverage could even be more expensive, simply because fewer companies offer it. “With less competition, rates can be higher,” says Gusner. “Companies that cater to high-risk drivers and are willing to insure rebuilt vehicles typically have higher rates compared to companies that insure safe or standard risk drivers and vehicles – as in a car with a clean title and driver with clean driving record.” As such, it may make sense to live with liability coverage alone.

Another factor to keep in mind is that a car that has been salvaged and rebuilt can be very hard to resell, meaning it’s probably only worth driving a car that’s been totaled if you really are the one who wants to keep driving it.