How do I calculate total loss for car insurance?

To calculate total loss for car insurance, you must determine the threshold, know your car's cash value, and find if there is GAP policy availability. Below we’ll cover further details you should know.

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UPDATED: Jun 2, 2022

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Written By: Laura BerryReviewed By: Joel OhmanUPDATED: Jun 2, 2022Fact Checked

Here's what you need to know

  • Different insurance companies use different criteria to determine total loss
  • Keeping maintenance records can help you receive more from your insurance company following a total loss
  • A GAP insurance policy can be considered if you owe more money on your vehicle than it’s worth because of depreciation

How does your insurance company determine the value of a totaled car? Calculating total loss for car insurance mainly hinges on average car comparison, but there are other factors to the total loss formula that can impact the final result.

It’s all about you. We want to help you make the right coverage choices. Shopping around is the best way to find cheap car insurance that will give you the coverage you need at a lower monthly payment.

Enter your ZIP code above for free auto insurance quotes from multiple insurance carriers near you.

What is a total loss car value calculator?

It is in your best interest to keep all maintenance records to help prove the condition of your vehicle. Total loss can be quite devastating with a vehicle because of depreciation, which is especially true if you still owe money on the car at the time of the accident. Providing as much information as you can to your insurance claim inspector can help you get fair value for your car.

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How to Calculate Total Loss for Car Insurance

In this article, we discuss three proven steps to calculate a total loss for car insurance:

  • Figuring out what the total loss threshold is
  • Determining the actual cash value of your vehicle
  • Deciding if GAP coverage can help

We’ll also discuss if all companies determine a total loss in the same way, and what happens when your car is totaled.

How do I know my total loss on car insurance?

You may be wondering, “What is the total loss threshold? How do insurance companies value a totaled car?” These are questions that generally come along in the process of a car insurance claim, and the answer is going to depend on a number of factors. Totaled car values will change based on the type of car it is and what sort of damage occurred.

A car insurance total loss is not necessarily what you may expect. Although a car that is considered a total loss has usually been in an accident, it does not necessarily mean that it is beyond repair or permanently deemed unsafe to drive regardless of repair.

“How do I know my total loss on car insurance?” Claim inspectors deem a vehicle a total loss if the value of the repairs exceeds the actual cash value of the car.

How do insurance companies determine a total loss? How much damage does it take to total a car?

Some insurance companies may differ on the percentage to consider for a total loss, but typically if total loss calculations show a car’s repair costs will exceed 75% or more of the car’s value, the insurance company will declare it a total loss.

To figure out what the total loss threshold is for your insurance company, you will have to contact them.

Insurance is solely about financial protection, so when it comes to determining if a car is a total loss or not the insurance company will ultimately let the money and the cost of repairs make the final decision.

To calculate a total insurance loss for your car insurance, determine the cash value by using the various methods below.

How do I determine the cash value of my car?

Every car has a different cash value, although there are a few factors that are weighed heavily in calculating the insurance value of your car. The basics are consideration of:

  • Make
  • Model
  • Year of the car

This is very similar to determining the selling value of your car using Kelley Blue Book to decide on the trade-in value versus the street value.

Determining Sale Value of a Vehicle
Vehicle CriteriaEffect on Sale Value
Maintenance RecordsHaving maintenance records may help prove your car’s mechanical condition as well as display any aftermarket value that may have been added to the car.
Condition of Car BodyWhile “fair, good, and excellent” are subjective words, it is important to try to label your car correctly. Recent pre-accident pictures of the car can sometimes be helpful in proving body condition.
MileageMileage is easy to prove since it will be on the odometer, and that is the next thing that will be added to the appraisal. The lower the mileage, the higher cash value your car may have, so it’s very helpful to know this number. If you cannot access your odometer to prove the mileage, it is possible that you have an odometer reading on the invoice from your last oil change.
Trim PackageThe type of trim your vehicle has and any amenities can be part of the deliberation.
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You can get dealer prices from the internet or ask for a quote in writing from a dealer directly. Having a written quote may help your insurance claim inspector as he prepares the appraisal.

How do I dispute the insurance company’s decision? Keep reading to learn how to fight your insurance company’s quote for a totaled car.

If you do not feel the insurance adjuster is giving you a fair assessment, ask if an unaffiliated auto body shop can provide a second estimate. That way you are confident that your totaled car insurance payout is fair.

Most insurance companies work with auto body shops and have an affiliation that may not be in your best interest.

Your auto insurance company ultimately works for you to protect your financial assets, so if you are not comfortable with what you are being told, ask questions.

In the case of a total loss car insurance settlement, some people may be happy with the payout from the insurance provider.

However, if the vehicle is new and still being financed, chances are the total loss payout will not be enough to cover the balance remaining on the loan agreement.

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Do you have an applicable GAP car insurance policy?

What is GAP insurance? What happens when your car is totaled and you still owe money on it?

The only true protection is to have GAP insurance on an auto loan that covers the financial gap of the loss of a total car.

The table below details what car insurance companies include in their GAP coverage.

New Car Replacement Car Insurance Coverage Details for Major Providers
CompaniesGAP Insurance Details
AcuityCovers first 4 years of new vehicle ownership. Also available for motorcycles.
AlliedApplies to cars up to 3 years old; then is replaced by gap insurance.
AllstateVehicle must be 2 model years old or newer.
American FamilyCovers first year of new vehicle ownership. Capped at 110 percent of manufacturer’s suggested retail price of original vehicle.
AmeripriseCovers first year or first 15,000 miles. If new vehicle of same make and model isn’t available, pays up to 110 percent of the original vehicle's MSRP.
CincinnatiCoverage must begin within 30 days of buying a new car with fewer than 1,000 miles on it from current or previous model year.
Concord GroupCoverage for first 12 months included at no extra cost. Can be extended up to 24 months after purchase.
Erie Covers the first 2 years. Can be added at any time before a loss.
FarmersVehicle must be insured with Farmers upon purchase and be less than 2 years old or have fewer than 24,000 miles.
Farm Bureau (Iowa group)Applies to vehicles up to 4 model years old (5 in some states).
HanoverCovers first year or first 15,000 miles.
The HartfordCovers the first 15 months or 15,000 miles. Policies available only to AARP members in most states.
Liberty MutualVehicle must be less than a year old and have fewer than 15,000 miles.
MetLifeCovers first year or first 15,000 miles.
Nodak (North Dakota Farm Bureau)Vehicle must be no more than 2 years old and have fewer than 24,001 miles.
Penn NationalDoes not apply if new car is stolen or damaged by fire.
Plymouth RockCovers original owner's first 2 years of ownership, with upgrade packages available.
SafecoApplies to original owner of a car less than a year old.
ShelterCovers first year or first 15,000 miles. Included on all Shelter auto policies.
TravelersCovers first 5 years of new vehicle ownership. Does not apply if car is stolen or damaged by fire or flood. Also includes gap coverage and lower deductible for glass claims.
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Vehicles depreciate rapidly, sometimes losing as much as 25 percent of its value as soon as they are driven off of the dealer’s lot.

If a vehicle is financed, then you are most likely making monthly payments that are primarily paying off interest and only a little principal.

How does GAP insurance work if a car is totaled?

If your car is totaled in an accident while you are in this situation then chances are the cash value of your car will not be enough to pay off the loan balance in full.

This means that you are still obligated to make car payments for a car that will no longer be in your possession.

You can take a chance on not having total loss coverage or you can purchase GAP insurance for a fairly hefty price.

When budgeting for the cost of GAP insurance, dealerships will sell GAP insurance for around $500, but you can add it to your auto insurance policy for about five percent of your collision coverage and comprehensive coverage.

GAP (Guaranteed Auto Protection) helps pay for the difference between the actual cash value and the amount still due on the loan in the event a car is considered to be a total loss.

GAP is expensive, but it is usually considered a good idea for a car that is going to be leased or financed.

GAP can be purchased from some insurance agents and also through dealer financing. Since it is an expensive investment, shopping around for a good rate can be beneficial.

The Bottom Line

While there is some subjectivity in calculating a total insurance loss for car insurance, the majority of the determining factors arise from computations derived from average comparisons.

The insurance claims inspector has no personal attachment to your car, but since you do, you may feel it is being undervalued.

Emotions removed, if it truly is not being appraised correctly, do some research and present documents to your insurance company to substantiate your claim. This will help you learn how to negotiate with insurance adjustors over a car total loss.

It can be financially painful to suffer a total loss, but if you have GAP it can help ease the burden should your car ever become involved in an accident of this nature.

Request quotes for auto insurance and compare them to make sure you are getting the best deal.

Enter your ZIP to start comparing car insurance rates now and find out how expensive is GAP insurance.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

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