If you’ve driven the same car that saw you through many life milestones, you know that it would be tough to part ways with it. When you’re driving an older car and it gets damaged, your first instinct is to repair it.
But if the repairs cost more than what your car is worth, the insurance company declares it a total loss.
But can you still keep and drive your car after it’s deemed a total loss? It’s possible to do this — but it’s not quite so simple. There are a lot of things to consider about how insurance covers totaled cars, and what happens if you opt to keep your car.
What does a “total loss” mean?
A “total loss” occurs when a claims adjuster deems that it’d be better to replace your car given the amount of work needed to fix up your car back to driveable condition. Depending on what state you live in, a claims adjuster will make this decision according to different formulas.
Here’s how it works. First, the claims adjuster will determine your car’s Actual Cash Value (ACV) using their own formulas (i.e., not just the Kelley Blue Book price). They’ll consider the price of your car before the crash, not what it’s worth now.
The claims adjuster will then estimate the cost to repair your car. If the amount is above a certain percentage relative to its ACV, then it’s considered a total loss. This percentage varies by state, and is typically 75-100 percent or more of the car’s value.
For example, your insurance company might declare your 15-year-old car a total loss even if it suffers from minor damages. The insurer sees the car’s low value and compares it to the expensive repairs. At the same time, major damage to a new luxury car might not be a total loss. It all depends on the car’s value compared to the cost of repairs.
Many states use another method called the Total Loss Formula (TLF). In this case, the claims adjuster will add up your car’s salvage value plus the cost to repair it.
Adjusters determine the salvage value depending on the condition of the car’s operating parts and body. If this number is greater than the car’s ACV, then your car is a total loss.
What kind of insurance coverage do you need for a total loss to be covered?
Unfortunately, you won’t automatically get any compensation if your car’s a total loss. It all depends on who caused the accident, and what type of insurance you have.
If someone else is at-fault in an accident, at least you can breathe a sigh of relief in this case. Assuming the other person has insurance, their policy (assuming they have property damage liability coverage) will cover the cost of any payments made out to you in the case of a totaled car. But you would still report the accident and file a claim to your insurance company.
If you caused the accident yourself, then you’ll need to have collision insurance to get covered for the accident. Alternatively, if something else damaged your car, such as a falling tree, a flood, or a wildfire, you’ll need to have comprehensive insurance.
If my car is declared a total loss can I still drive it?
Now that you understand how declaring a car a total loss works, let’s get back to the heart of the matter: whether you can still drive it if it’s declared a total loss.
First — until you get the car repaired, no, you cannot drive your car.
After the insurance company declares your car a total loss, they’ll come to you with an offer for a cash settlement. This will be the ACV of your car, plus the salvage value.
If you accept the cash settlement offer, you are basically agreeing to sell your car to the insurance company, who will then salvage it for parts for whatever value it still has.
But, you have another option — you can keep the vehicle. In this case, the insurance company will only pay out the ACV of your car, and you get to keep it.
Regardless of which option you choose, you still have one problem remaining. It’s required for the insurance company to report that your car is now a total loss to your state’s motor vehicle department.
If you keep the car, your car will have a new “salvage title.” This means that your car is currently only good for parts, and cannot be legally driven on the road. But don’t worry — there is a way to get it back to road-worthy status.
Can I clear a salvage title so I can drive my car again?
If you choose to keep your car and accept the cash payout for the car’s ACV, you can use that money to fund the repairs on your car. Remember, though, you can’t drive the car while it has a salvage title, so you’ll need to tow it to and from the repair shop.
Once it’s back in tip-top shape again, you can apply to have your salvage title cleared. You’ll need to tow the car to your state’s motor vehicle agency and pay a fee to have it inspected.
If it passes, your car will have a new title, and you can now legally drive your car again. However, a new title doesn’t erase the car’s history as a salvage vehicle. If you decide to sell this car in the future, new owners will know its backstory.
Is it a good idea to drive a vehicle that’s been declared a total loss?
We’ve outlined the process you can use to clear a totaled vehicle so that you can drive it again. However, it’s important to know that owning a totaled-and-cleared vehicle still comes with consequences.
First, if your car gets into a car crash and declared a total loss, it’s possible that there will still be damage remaining even if you get it fixed. There may be unseen structural damage with the frame, loose wires, or damaged airbags. This can still make it risky to drive, even after the repairs.
Second, when you get your car inspected to clear the title, it’s generally only an inspection for stolen parts. The inspection doesn’t do much to determine whether your ride is actually safe to drive or not. So even if the car passes the inspection, it’s a good idea to get it looked at by an experienced mechanic.
Finally, because your car now has a branded title, it’ll be a lot harder to sell in the future should you decide to do so. Potential buyers will be able to see its history as a vehicle that was previously a total loss, which can make it less likely they’ll want to buy it.
Still, if you are careful in fixing up your car, take the proper legal steps to get it road-worthy again, and don’t care much about reselling your car in the future, fixing up your totaled car can be a great way to keep something that’s sentimental to you.