What do auto insurance companies do with totaled cars in 2026? (Details Here!)

When your vehicle is badly damaged, you’ll probably find yourself wondering, “What do auto insurance companies do with totaled cars?” The answer mainly depends on what you want to do with it.

So, what do insurance companies do with totaled cars? Can you ask your insurance company to total your car? At what point is a car considered totaled? Can you get auto insurance after your car has been declared a total loss?

Explore these questions below, and enter your ZIP code into our free comparison tool when you’re ready to find affordable coverage for your vehicle. 

What Happens When a Car is Totaled

When your car is declared a total loss, the next question you might be wondering is, what happens to totaled cars? Where do totaled vehicles go? The process differs from state to state, but typically, the insurance company will take ownership of the totaled car and label it as “salvage.” At that point, where do insurance companies sell a totaled car?

Generally speaking, insurance companies take the following steps after totaling a car:

• Assess the Car’s Value and Pay the Claim: The insurer determines the car’s actual cash value (ACV) and subtracts any deductible before paying the policyholder.
• Take Ownership of the Car: Once a claim is settled, the insurer usually takes possession of the totaled vehicle.
• Sell at a Salvage Auction: The car is often sent to a salvage auction, where junkyards, rebuilders, and parts resellers bid on it.
• Sell for Parts or Scrap: If the car is beyond repair, it may be stripped for usable parts, and the rest is scrapped for metal recycling.
• Allow Buyback by the Owner: In some cases, the policyholder can buy back the totaled vehicle (usually at the salvage price) if they wish to repair or keep it.

The DMV will issue a salvage certificate for the car and then sell the totaled car to a salvage yard vendor, who will resell it based on state-specific regulations. Some states require sales tax to be paid as part of total-loss settlements, but the requirements may vary.

Interested in buying a car directly from an insurance company? If you want to know how to buy wrecked cars from insurance companies, you’ll need to check auctions like Copart and IAAI. However, if you purchase total loss cars for sale from insurance companies and you want to drive them, you’ll need to repair the vehicles and purchase insurance.

Auto Insurance Rates for a Totaled Car

When an insurance company totals a car, you may think that you’ll need a new one. However, that’s not necessarily true. In fact, you can sometimes buy salvage cars from insurance companies if you know where to look.

When a car is totaled, most drivers let their insurance companies take the car. Insurance companies usually sell the car for parts to recoup some of their losses. However, you can elect to hold on to your car if you’d prefer to try to repair it. You’ll be issued a salvage title if you choose to keep your totaled car.

However, before you can drive your car again, you’ll need to get your salvage title changed to a rebuilt or rebranded title. Once you have a rebuilt title, you can register and insure your car again. Insurance rates might be higher for a rebuilt title car though, as you can see in the rates below.

Rebuilt Title Monthly Auto Insurance Rates by Coverage Level

Insurance might cost a bit more simply because companies consider a car with a rebuilt title a riskier prospect to insure. However, it’s not impossible to find affordable rebuilt car insurance — you just need to shop at the best auto insurance companies that cover salvage title cars.

Simply visit the homepage of any insurance company you’re interested in to get a personalized quote. Once you have a few, you’ll be able to compare prices to find the lowest price.

If you don’t want to visit different websites, you can simply enter your ZIP code into our free comparison tool to see multiple rates at once.

How Insurance Companies Decide to Declare a Total Loss

What does a totaled car mean? Exactly what deems a car a total loss? And what does an insurance company do with a totaled car?

Wrecked cars are considered to be a total loss by insurance companies when the cost of repair is higher than the actual cash value (ACV) of the car. Practically speaking, it isn’t always viable to repair a car, even when that cost is lower than the cash for the totaled car. For example, a vehicle worth $5,000 needing repairs worth $4500 will be considered totaled by the insurer. 

In most cases, insurance companies will consider a vehicle totaled when the repairs are likely to cost 75% or more of ACV, and if that’s the case, the insurance company will sell the total loss car. How much insurance companies sell totaled cars for will vary. You might be curious about certain company processes, like what State Farm does with totaled cars or where Progressive takes totaled cars.

Contact the specific company you’re interested in to find out details about what the insurance company does with a totaled car.

However, in some states, a car will be totaled if the damage exceeds the Total Loss Threshold (TLT) for the car. The TLT is how high the damage ratio must be before the car is eligible for a salvage title. The TLT ranges between 50%-100% depending on your state. For instance, the Arizona total loss threshold could be different from Michigan’s total loss threshold.

How to Contest a Total Loss Settlement

Once your car has been totaled and is declared a total loss, the insurance company will offer a settlement based on the fair pre-accident value of the vehicle. You are not expected to accept the first settlement offer. You can drive up the total loss settlement if you negotiate the amount of cash for any totaled cars. You can calculate the value of your totaled car and accurately reflect its value by presenting the following points: 

• If some features of your car weren’t added to the appraisal estimate, you can ask your adjustor to add those features to drive up the car value
• Ask the insurance company to narrow down the inventory of cars from the comparable list 
• Request that your insurer expand the search area if there are no comparable cars in your area
• Adjusters might have a little room to increase the valuation of your car, simply ask them for a better price
• Show them your listings and local ads

Doing your homework and presenting these arguments can often help you get a better settlement. 

What to Do With a Totaled Car

Your car is totaled, so what now? To start, you will have to finalize the total loss car insurance claims process. First, a settlement offer will be sent to you. Once you accept the offer, you will be asked to sign a power of attorney and transfer the title of your car to the insurance company, which answers the question of what happens to the title when a car is totaled. 

While signing the power of attorney for a totaled car and then handing the totaled car to the insurance company is a common practice, it isn’t a requirement. 

Read more: How to Get an Attorney Auto Insurance Discount 

So, do you have to get rid of a totaled car? No, you can opt to keep your vehicle. You may decide to do so for sentimental purposes or because you can get the damage repaired on your own. Note that in the case you decide to keep your car, you will not receive the full settlement payment. Rather, your offer will be decreased by the salvage value for the total loss vehicle. 

If you’re thinking about keeping a salvage-certified car, research well before you come to a decision despite the car’s salvage value. Get several repair estimates from qualified mechanics and find an insurer who will insure a totaled car. Note that few are willing to provide insurance for a salvage vehicle, so make sure your vehicle qualifies for auto insurance for salvage cars before coming to a decision.

Find the Best Totaled Car Insurance Today

So, ultimately, what do auto insurance companies do with totaled cars? Totaled cars will be certified as salvage and will be sold off by the insurance company to a salvage vendor working with the DMV. If you’re wondering, “Can I keep my car after the insurance company totals it?”, you usually have the option to keep your salvaged car. Is there totaled car insurance? Not exactly.

While you might want to do so for sentimental reasons, it’s best to make the decision after getting the repair estimates and finding an insurance company that is ready to insure it after you’ve thoroughly learned what insurance companies do with totaled cars. If you decide you want to keep your totaled car to drive later, you can find affordable salvage car insurance by entering your ZIP code into our free comparison tool.