By Shawn Henry 
Once the adjuster marks your car as a total loss, things usually move pretty quickly.
Here’s the typical process.
1. The Insurance Company Figures Out What Your Car Was Worth
They calculate your vehicle’s Actual Cash Value (ACV), which is basically what it was worth right before the crash.
Important: this is not what you paid for it.
It’s based on things like:
- Make and model
- Trim level
- Mileage
- Condition (before the accident)
- Local market prices
- Comparable listings in your region
If you bought the car during the peak pricing craziness, this part can feel brutal. People get mad because they paid $28,000 and the insurance company says it’s worth $21,000. That’s common.
2. They Send You a Settlement Offer
Once they decide the ACV, they send you an offer.
That offer may include:
- vehicle value
- taxes (depends on state)
- registration fees (sometimes)
Then they subtract:
- your deductible (if you’re filing under your own policy)
- any “condition adjustments” they decide to apply
If you’re dealing with the other driver’s insurance and they’re clearly at fault, you may not have a deductible at all.
3. If You Have a Loan, the Lender Gets Paid First
If the car is financed, you usually don’t get a check made out only to you.
Insurance will typically pay the lienholder (your bank) first.
Then:
- If the payout is more than you owe, you get the leftover amount.
- If the payout is less than you owe, you’re responsible for the difference.
This is where people get blindsided.
What If You Owe More Than the Car Is Worth?
This happens all the time, especially with longer loans.
If you owe more than the insurance payout, you’re considered upside down on the loan.
Example:
- Insurance payout: $17,500
- Loan balance: $22,000
- You still owe: $4,500
That $4,500 doesn’t magically disappear just because the car is gone.
And that’s exactly why gap insurance exists.
What Is Gap Insurance (And Does It Cover You)?
Gap insurance covers the “gap” between what you owe and what the insurance company pays.
So if you’re upside down, gap coverage can pay the difference and wipe out the remaining loan balance.
Gap insurance is especially important if you:
- financed for 72 or 84 months
- put little money down
- bought a vehicle that depreciates quickly
- rolled negative equity from a previous loan into the new one
Without gap coverage, a total loss can turn into a nightmare where you’re still making payments on a car you don’t even own anymore.
Can You Negotiate the Total Loss Settlement?
Yes. And honestly, you probably should.
Insurance companies don’t always offer the best number upfront. They’re working off automated systems and local comps, and those comps aren’t always fair.
If the offer feels low, ask for the valuation report and look at what they used.
Pay attention to:
- mileage adjustments
- trim level mistakes
- missing features
- incorrect “condition” deductions
Then check local listings yourself.
If you can find similar vehicles selling for more, send those links to the adjuster.
Also, if you recently spent money on the car, gather proof:
- tire receipts
- maintenance records
- new battery
- major repairs
It won’t always change the value, but it can help.
What Happens to the Car After It’s Totaled?
Once you accept the settlement, the insurance company typically takes possession of the vehicle and sends it to auction.
From there it may be:
- sold as salvage
- repaired and resold with a rebuilt title
- stripped for parts
- scrapped entirely
That’s why you should grab your belongings quickly.
Can You Keep a Totaled Car?
Sometimes, yes.
This is usually called owner retention.
Basically, you keep the vehicle and the insurer reduces your payout because they’re not getting the salvage value.
This can be worth it if:
- the car still runs
- the damage is cosmetic
- you know a cheap repair shop
- you want to part it out yourself
But there are downsides.
Keeping a totaled vehicle may mean:
- a salvage title
- issues registering it
- difficulty insuring it again
- reduced resale value permanently
For most people, it’s not worth the hassle unless you’re confident you know what you’re doing.
Will Your Insurance Rates Go Up After a Total Loss?
It depends on fault.
If You Were At Fault
Yes, your rates may increase at renewal. Not always immediately, but it’s common.
The bigger the claim, the more likely you’ll see a jump.
If You Were Not At Fault
In many states, insurers aren’t supposed to raise rates for a not-at-fault accident.
In real life, it’s complicated. Some people still see higher premiums later on, especially if they have multiple claims over a short period.
Either way, it’s not a guarantee, but it’s something to expect.
What If Someone Else Caused the Accident?
If another driver is clearly responsible, you have two routes:
File Through Their Insurance (Third-Party Claim)
Pros:
- usually no deductible
- their policy pays
Cons:
- slower process
- they may fight liability
- coverage limits can become a problem
File Through Your Own Insurance (Collision Coverage)
Pros:
- faster
- less arguing
- your insurer handles the claim
Cons:
- you pay the deductible upfront
- you may need to wait for reimbursement
Your insurer can later pursue the other insurance company through subrogation.
What If the Other Driver Has No Insurance?
If the at-fault driver is uninsured, your options depend on your coverage.
If you have:
- collision coverage
- uninsured motorist property damage (varies by state)
you may still be covered.
If you don’t have either, your only option may be legal action, and realistically… most people never see the money.
What Happens to Your Plates and Registration?
This depends on your state, but usually:
- you can transfer your plates to another vehicle
- you may need to cancel the registration
- you might be eligible for a refund on unused registration fees
Don’t assume the DMV automatically handles anything.
What You Should Do Immediately After a Total Loss
If your car is totaled, here’s what you should do right away:
Get the valuation report
This is the single biggest thing people skip.
Remove your personal belongings
Once the car is moved to a salvage yard, it becomes harder than it should be to retrieve items.
Check your loan payoff balance
If you have financing, find out exactly what you owe.
Review your coverage
If you’re going to buy another vehicle soon, avoid letting your insurance lapse. Gaps in coverage can raise rates.
Final Thoughts
A total loss claim is frustrating, but it doesn’t have to be a financial disaster.
Just remember:
- Insurance pays what the car was worth, not what you paid
- You can negotiate if the settlement seems low
- If you’re upside down, gap insurance can save you
- Keeping the totaled car is possible, but it comes with headaches
Most importantly, don’t rush.
Insurance companies want you to accept the offer and move on. Take a day, look at the numbers, and make sure it makes sense.
Because once you sign the settlement paperwork, that part is usually over.
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