When Do Insurers Declare a Car a Total Loss - Know Vehicle Total Loss Thresholds
Aug 30, 2025
When your car is badly damaged in an accident, one of the biggest questions is whether your insurance company will repair it or declare it a total loss.
This decision depends on something called the total loss threshold, a calculation that determines whether repair costs are too high compared to the vehicle’s value.
Knowing how insurers evaluate total loss claims, calculate these thresholds, and determine settlement amounts can help you protect your financial interests and secure a fair payout through a proper total loss appraisal.
What Is a Total Loss Threshold?
A total loss threshold is the percentage at which your insurance company decides that repairing your vehicle costs more than the car is worth.
If the estimated repair costs exceed this percentage of the car’s Actual Cash Value (ACV), the vehicle will be declared a total loss.
In some states, this threshold can be as low as 50 percent, while in others it is closer to 100 percent. For example, if your car’s ACV is $15,000 and repairs cost $10,000, that is about 67 percent.
Depending on your state’s threshold, the insurer may either repair your car or declare it totaled.
This variation is why state laws and insurer policies play such an important role in total loss claims.
How Insurance Companies Calculate Total Loss
The total loss decision is based on several steps in the car appraisal process.
Determining the Actual Cash Value (ACV)
The ACV is your vehicle’s fair market value immediately before the accident. Insurers look at:
Make, model, and year of the vehicle
Mileage and age
Overall condition before the crash
Comparable vehicles for sale in your area
Pre-existing damage or wear and tear
Estimating Repair Costs
Insurance adjusters then calculate the cost to restore the vehicle to pre-accident condition.
This may include parts and labor, paint and refinishing work, rental car coverage during repairs, taxes on parts, and possible diminished value after repairs.
Applying the Total Loss Formula
Most insurers use a simple formula:
Repair Costs ÷ Actual Cash Value ≥ Threshold = Total Loss
For example, if your car’s ACV is $12,000 and repair costs are $9,000, that equals a 75 percent damage ratio.
If your state’s threshold is 70 percent, your car will be totaled. If it is 80 percent, it may still be repaired.
State-by-State Total Loss Thresholds
Because thresholds differ by state, your location can directly affect whether your car is declared totaled.
High Threshold States (75 to 100 percent)
Texas 100 percent (repairs must exceed value)
Colorado 100 percent
Washington 80 percent
Lowa 80 percent
Moderate Threshold States (60 to 74 percent)
Florida 80 percent (but many insurers use 75 percent)
New York 75 percent
California 65 to 70 percent (varies by insurer)
Illinois 70 percent
Lower Threshold States (50 to 59 percent)
Montana 60 percent
Oklahoma 60 percent
Arkansas 70 percent (often applied at 60 percent)
Always check your state’s specific threshold and your insurer’s policy to understand how your case may be handled.
Why Total Loss Thresholds Matter
Understanding these thresholds is critical for drivers.
Financial Impact: Whether you receive a repair settlement or a total loss payout depends on the threshold.
Total loss payouts generally include the vehicle’s ACV, minus your deductible, and minus salvage value if you choose to keep the car.
Diminished Value: If your car is repaired, you may still qualify for a diminished value claim to recover the drop in resale value.
With a total loss, diminished value does not apply since you receive the pre-accident value.
Replacement Planning: Knowing your state’s threshold helps you plan whether you will be waiting for repairs or shopping for a replacement vehicle.
Comparison Table: Repair vs Total Loss vs Diminished Value
Claim Outcome | What It Means | What You Receive | Key Considerations |
|---|---|---|---|
Vehicle Repaired | Damage is below the total loss threshold | Cost of repairs covered by insurance (minus deductible) | Car may lose resale value; possible diminished value claim |
Vehicle Declared Total Loss | Repairs exceed the threshold, andthe car is totaled | Actual Cash Value (ACV) minus deductible and salvage value | You may need to buy a replacement car; diminished value does not apply |
Diminished Value Claim | Vehicle is repaired but worth less after accident | Compensation for lost resale value | Applies only if car is repaired and not totaled; varies by state and insurer |
When to Challenge a Total Loss Decision
Sometimes, the insurance company’s decision may not be in your best interest. You can challenge a total loss determination if:
The ACV seems too low: Provide maintenance records, photos, receipts for upgrades, and listings of similar vehicles.
Repair estimates appear inflated: Get a second opinion from another certified repair shop.
Salvage value is unfairly high: High salvage values reduce your payout, so you may dispute them if they seem excessive.
The Total Loss Appraisal Process
When your car is declared a total loss, the insurer conducts a total loss appraisal to calculate settlement value.
This typically includes professional appraisal services, documentation review, and a market analysis comparing similar vehicles in your area.
If you disagree, you can request an independent appraisal to challenge the insurer’s offer.
How to Protect Yourself in a Total Loss Claim
Maintain records: Keep receipts, service history, and photos showing pre-accident condition.
Know your rights: Research your state’s total loss laws.
Get independent help: Hire a professional total loss appraiser if you feel undervalued.
Document everything: Save all communication with your insurer, including emails, repair estimates, and settlement letters.
At My Fair Claim, we help vehicle owners challenge unfair total loss valuations and secure fair market value settlements from their insurance companies.
Using Totaled Car Value Calculators
Online totaled car value calculators can give you a quick estimate of your car’s worth. While these tools provide a useful starting point, they don’t always account for your vehicle’s condition, upgrades, or local market.
For the most accurate results, consult a professional appraisal service.
Working with Professional Appraisers
Independent appraisers provide unbiased valuations of your vehicle, support for disputes with insurance companies, evidence-based reports for negotiation, and potentially thousands of dollars in additional settlement value.
Whether you’re insured with State Farm, Progressive, Allstate, or another company, having an expert on your side can make a huge difference.
Frequently Asked Questions about Vehicle Total Loss
1. Can I keep my car after it is declared a total loss?
Yes. If you want to keep your car, the insurance company will deduct the salvage value from your payout. You will then receive a lower settlement but keep the vehicle.
2. How do insurance companies determine the value of a totaled car?
They use Actual Cash Value, which is based on your car’s age, mileage, condition, and comparable vehicles in your area. Independent appraisers can provide a second opinion if you believe the valuation is unfair.
3. What happens if repairs cost less than the total loss threshold?
If the cost is below the threshold, the insurer will usually approve repairs instead of declaring the car totaled.
4. What if I disagree with the insurance company’s total loss decision?
You can request an independent appraisal, present comparable listings, and provide documentation to support your case.
5. Do I still owe money on a totaled car if I have a loan?
Yes. If you have a car loan or lease, you are still responsible for the balance. If your payout is less than what you owe, gap insurance may cover the difference.
Conclusion
A total loss threshold is more than just a percentage. It is the deciding factor in whether your car gets repaired or replaced.
By understanding how insurers calculate total loss, knowing your state’s laws, and seeking professional appraisal help when needed, you can protect your financial recovery after an accident.
If you are facing a potential total loss or believe your insurer’s offer is unfair, do not settle for less.
Contact My Fair Claim for expert guidance, independent appraisals, and the support you need to secure the compensation you deserve.