A car is considered totaled when the cost to repair the damage exceeds the vehicle's actual cash value (ACV) at the time of the accident. This means the insurance company determines that it is not economically feasible to repair the car because the repair expenses are higher than the car's worth just before the incident. Key factors that make a car totaled include:
- Repair costs that are close to or exceed a certain percentage of the car's ACV, which varies by state but is commonly around 60% to 80%.
- Significant damage such as a bent frame, severe front-end damage, leaking essential fluids, or engine failure.
- Situations where the car is unsafe to drive even after repairs.
- Other causes like flood damage or catastrophic events that severely affect the vehicle.
Insurance companies use either a total loss threshold or a total loss formula to decide if a car is totaled. The total loss threshold is a state-specific percentage of the car's ACV, while the total loss formula considers repair costs plus salvage value compared to the ACV. If the damage cost surpasses these benchmarks, the car is declared totaled, and the insurance pays the ACV amount minus any deductible.
