How do insurance companies decide to total a car?

While each car insurance company approaches the decision differently, many insurers declare the vehicle a total loss if the estimated cost of repairs plus the salvage value equals or exceeds the car's actual cash value.

The actual cash value is a car's fair market value – or, replacement cost less depreciation. Adjusters typically determine a car's actual cash value by looking to their company's proprietary database of values.

Some insurers total the car if repair costs exceed a certain percentage of the car's actual cash value. Common thresholds for totaling a vehicle are 51 percent or 80% of the value, at the insurer's discretion.

Some states impose guidelines for the percentage at which a vehicle can be declared a total loss. This is called a total loss threshold, and it can vary.

Can you disagree with the adjuster's decision?

If you don't agree with the decision to total the car, or the valuation of it, there are steps you can take to either challenge the insurance adjuster's determination or to reclaim the totaled vehicle.

  • Challenging list value. You're entitled to the pre-accident market price of the car. if it's a total loss The insurer's valuation, based on the car's make, model and year, may understate your vehicle's market value. You can argue that your vehicle is worth more than the standard listed price by submitting service and mileage records, as well as affidavits from mechanics.
  • Disputing an insurance assessment. To dispute the claims adjuster's assessment, you may hire an independent appraiser, contact a consumer representative at the state's department of insurance or, as a last resort, pursue arbitration or litigation.
  • Reclaiming a totaled vehicle. Most insurers allow owners to retain a totaled vehicle. In this case, you will get a smaller settlement from the insurance company, since it is forfeiting the salvage value of the car. 

State law will also have an impact on whether or not you can retain a totaled vehicle. It may have a salvage title and cost more to insure. However, you may get more for the car if you sell it for parts yourself than if you let the insurance company have it.