A total loss claim occurs when your vehicle’s repair costs exceed its actual cash value or your state’s total loss threshold (75% in Maryland). Your insurance company pays you the car’s pre-accident market value minus your deductible, then takes ownership of the vehicle for salvage.
Quick Answer: Understanding Total Loss Claims
A total loss claim is triggered when repairing your vehicle costs more than the car is worth. When this happens, your insurance company declares the vehicle a total loss, pays you its actual cash value (ACV) minus your deductible, and takes ownership of the damaged vehicle.
The total loss process typically takes 2-4 weeks from declaration to payment. You’ll need to remove personal belongings, surrender your title, and arrange for the vehicle’s transport to a salvage facility. If you still owe money on the car, your lender gets paid first from the settlement.
Understanding this process helps you navigate the claim smoothly, negotiate effectively if needed, and move forward with replacing your vehicle.
Key Insights
- Maryland’s threshold is 75%. Your vehicle is totaled when repair costs plus salvage value reach 75% of its actual cash value.
- Actual cash value isn’t what you paid. Your settlement reflects current market value based on comparable vehicles, not your purchase price or loan balance.
- Lenders get paid first. If you’re financing, the insurance payout goes to your lender before you receive any remaining funds.
- Gap insurance only helps with negative equity. Gap coverage activates only when you owe more than your car’s value. It pays the difference between the settlement and your loan balance.
- You can dispute the valuation. Research comparable vehicles to negotiate a higher settlement if the insurance company’s offer seems low.
- Storage fees accumulate quickly. Totaled vehicles at body shops or tow yards cost $30-75 per day after your policy’s coverage period ends (typically 7-14 days).
- Keeping the car reduces your payout. Owner-retained salvage means accepting 10-40% less in settlement, receiving a salvage title, and passing inspections for road use.
What Is a Total Loss Claim?
A total loss claim happens when your insurance company determines that repairing your damaged vehicle would cost more than the vehicle’s actual cash value or exceeds your state’s total loss threshold percentage. In Maryland, that threshold is 75% of the vehicle’s value.
Here’s how this works in practice. Your car sustains $12,000 in collision damage. Your insurance adjuster determines the car’s actual cash value (what it was worth immediately before the accident) is $15,000. Since $12,000 represents 80% of the vehicle’s value, and Maryland’s threshold is 75%, your insurer will declare it a total loss.
The total loss formula: (Repair Costs + Salvage Value) ÷ Actual Cash Value = Total Loss Percentage
If this percentage meets or exceeds your state’s threshold, the vehicle is totaled. Different states use different thresholds ranging from 60% to 100%, but Maryland uses 75%.
When total loss typically occurs:
Your vehicle sustains extensive collision damage affecting the frame, engine, or multiple major systems. Repair estimates exceed three-quarters of what the car is worth.
Your car is severely damaged by fire, flood, or other comprehensive loss. Water damage to electrical systems and interiors often totals vehicles even when they look repairable.
Your older vehicle sustains moderate damage. A 10-year-old car worth $8,000 can be totaled by $6,000 in repairs even though the damage seems fixable.
Insurance companies declare total loss not only to save money, but because extensively repaired vehicles often have diminished value and ongoing problems. A totaled designation protects you from owning a vehicle with compromised safety and reliability.
How Do Insurance Companies Determine if a Car Is Totaled?
Insurance companies compare your vehicle’s repair costs against its actual cash value using a specific calculation. If repair costs meet or exceed the state’s total loss threshold percentage (75% in Maryland), they declare the vehicle a total loss.
The determination process starts immediately after your accident. An insurance adjuster inspects the damage and creates a detailed repair estimate. This estimate includes parts, labor, taxes, and any additional costs needed to restore the vehicle to its pre-accident condition.
What adjusters evaluate:
- Visible damage assessment – The adjuster photographs and documents all external damage, noting bent frames, deployed airbags, crushed panels, and broken glass.
- Mechanical and structural evaluation – They check for frame damage, suspension problems, engine issues, and transmission damage. Frame damage alone often triggers total loss because repair costs are extremely high.
- Hidden damage investigation – Initial estimates sometimes reveal additional damage during teardown. If a preliminary estimate shows $8,000 in damage but teardown reveals another $5,000 in hidden damage, the total loss calculation changes.
- Parts and labor costs – Adjusters use standardized databases that include current market prices for OEM (original equipment manufacturer) parts and regional labor rates.
- Salvage value calculation – The adjuster also determines what the damaged vehicle is worth if sold to a salvage yard. This salvage value factors into the total loss formula.
- State threshold application – Maryland requires the formula: (Repair Cost + Salvage Value) ÷ ACV = Total Loss Percentage. If this equals or exceeds 75%, the vehicle is totaled.
Example calculation:
Your 2018 Honda Accord has an ACV of $16,000. Repair estimate is $11,000. Salvage value is $3,000.
($11,000 + $3,000) ÷ $16,000 = 87.5%
Since 87.5% exceeds Maryland’s 75% threshold, your Accord is declared a total loss.
Some insurance companies use thresholds lower than state minimums. Progressive might total a vehicle at 70% even though Maryland’s legal threshold is 75%. Insurers can be more conservative than state law requires, but cannot exceed the state threshold.
The determination typically takes 3-7 days after your initial claim. Complex cases with extensive damage or hidden issues take longer. Once declared, you’ll receive a total loss letter explaining the decision and outlining next steps.
How Much Will I Get for My Totaled Car?
You’ll receive your vehicle’s actual cash value (ACV) minus your deductible. Actual cash value is what your car was worth in the market immediately before the accident, not what you paid for it or what you owe on it.
Insurance companies determine ACV by researching comparable vehicles in your geographic area. They look at your car’s year, make, model, mileage, condition, and options, then compare it to similar vehicles recently sold within 50-100 miles of your location.
Factors that determine your payout:
- Vehicle age and mileage – A 2020 model with 30,000 miles is worth more than the same model with 80,000 miles. Insurers deduct value for every 1,000 miles over average for that model year.
- Condition before the accident – Pre-existing damage, worn tires, mechanical issues, and poor maintenance reduce ACV. Conversely, recent major repairs, new tires, or excellent condition increase it.
- Geographic market value – Cars in urban Maryland areas may have different values than rural areas. Your insurer researches recent sales of comparable vehicles specifically in your region.
- Options and features – Leather seats, sunroof, navigation system, upgraded sound system, and safety packages all increase ACV. The adjuster documents all options when inspecting your vehicle.
- Recent sales data – Insurers use databases like CCC, Mitchell, and Audatex that compile recent actual transaction prices for vehicles matching yours.
- Market conditions – Used car values fluctuate based on supply and demand. During periods of high used car prices, your ACV increases. When supply is abundant, values drop.
- Your deductible is subtracted – If your ACV is $18,000 and your deductible is $500, you receive $17,500.
Real-world payout example:
Your 2019 Toyota Camry LE with 45,000 miles is totaled. The insurance company researches comparable 2019 Camry LEs with similar mileage in Maryland and finds:
- Vehicle 1: $19,200 (private sale, 43,000 miles)
- Vehicle 2: $18,800 (dealer, 47,000 miles)
- Vehicle 3: $19,500 (private sale, 41,000 miles)
Average comparable value: $19,167
Your adjuster notes your car had new tires ($800 value) but also had a small dent in the rear bumper (deduct $300). Final ACV: $19,667.
With a $1,000 deductible, your payout is $18,667.
You’ll receive a detailed valuation report showing the comparable vehicles used, adjustments made for condition and options, and the final ACV calculation. This report is your starting point for negotiation if you disagree with the valuation.
Payment is typically issued within 5-10 business days after you accept the settlement and surrender the title. If you have a loan, the check goes directly to your lienholder. If you own the car outright, the check comes to you.
How Long Does a Total Loss Claim Take?
The total loss claims process typically takes 14-30 days from the initial accident to receiving your settlement check. The timeline varies based on claim complexity, your responsiveness, and whether you dispute the valuation.
Phase-by-phase timeline:
- Days 1-3: Initial claim and inspection
You report the accident to your insurance company. They assign an adjuster who contacts you within 24-48 hours to schedule a vehicle inspection. The adjuster photographs the damage and creates a preliminary repair estimate.
- Days 4-7: Total loss determination
The adjuster completes the damage assessment and calculates whether repair costs exceed the total loss threshold. If hidden damage is suspected, they may authorize partial teardown, which adds 2-3 days.
Once the numbers confirm total loss, the adjuster declares the vehicle totaled and begins ACV research.
- Days 8-14: Valuation and settlement offer
The adjuster researches comparable vehicles in your area and prepares a detailed valuation report. You receive the total loss settlement offer including the ACV calculation, comparable vehicles used, and your net payout amount.
You review the offer and either accept it, negotiate for a higher value, or dispute the determination.
- Days 15-21: Negotiation period (if applicable)
If you disagree with the valuation, you submit your own comparable vehicle research. The adjuster reviews your evidence and may adjust the offer. This negotiation can take 3-7 days depending on how quickly both parties respond.
- Days 22-25: Title and paperwork
Once you accept the settlement, you sign the title over to the insurance company. If you have a loan, your lender provides the title directly to the insurer. You complete required paperwork including a power of attorney form, damage disclosure, and settlement release.
- Days 26-30: Payment processing
After receiving all required documentation, the insurance company processes payment. Checks typically arrive within 5-10 business days. Electronic payments (if offered) arrive in 2-3 business days.
If you have a loan, the payment goes to your lender first. If you have positive equity, your lender sends you the remaining balance after satisfying the loan, which adds another 7-14 days.
Factors that speed up the process:
- Responding quickly to adjuster calls and emails
- Providing required documents immediately (title, registration, loan information)
- Having gap insurance information ready if applicable
- Accepting the initial settlement offer
- Being available for vehicle inspection within 24-48 hours
Factors that slow down the process:
- Disputing the valuation (adds 7-14 days)
- Difficulty locating your title or lienholder delays
- Hidden damage requiring teardown inspection
- Hiring an independent appraiser (adds 10-14 days)
- Unresponsiveness to adjuster communications
- Multiple parties involved (if you weren’t at fault and filing through another driver’s insurance)
In Maryland, insurance companies must handle claims in good faith and respond to your communications within reasonable timeframes. If your claim is taking significantly longer than 30 days without explanation, contact your state insurance commissioner’s office.
Can I Disagree with the Insurance Company’s Total Loss Decision?
Yes, you can dispute both the total loss determination itself and the vehicle’s valuation, though challenging the total loss decision is rarely successful if the math clearly exceeds your state’s threshold. Disputing the ACV valuation is more common and often results in a higher settlement.
Challenging the ACV valuation:
This is where most disputes occur and where you have the strongest grounds for negotiation. If you believe your vehicle was worth more than the insurer’s offer, gather evidence to support a higher value.
How to build your case:
Research comparable vehicles – Search used car websites like Autotrader, Cars.com, and CarGurus for vehicles matching your year, make, model, trim level, and mileage within 50 miles of your location. Print or save listings showing higher asking prices than your settlement offer.
Focus on actual asking prices, not inflated dealer listings. Use private party sales and certified pre-owned dealer prices for the most accurate comparisons.
Document your vehicle’s condition – If you have service records showing recent major maintenance (new transmission, engine work, new tires), these add value. Photos taken before the accident showing excellent condition strengthen your case.
Highlight valuable options – Review the adjuster’s report to confirm they credited all factory options and aftermarket additions. Missing a premium sound system or navigation package can reduce your ACV by $1,000-2,000.
Check for geographic errors – Insurers sometimes use comparables from different regions with lower prices. Verify that the comparable vehicles came from your area, not a state away where values differ.
Present your research formally – Submit your findings in writing to your adjuster. Include printed listings, photos, and a cover letter explaining why your vehicle’s value exceeds their offer. Request specific dollar adjustments based on your evidence.
Most adjusters will review legitimate comparable research and adjust offers when evidence supports higher values. Expect to negotiate back and forth 1-3 times before reaching a final settlement.
If negotiation with your adjuster fails:
Request adjuster’s supervisor – Ask to escalate your dispute to the claims supervisor. Explain your research and why you believe the valuation is incorrect.
Hire an independent appraiser – A certified independent appraiser will inspect your vehicle (if possible before it’s moved to salvage) and prepare a professional valuation report. This costs $300-600 but may result in a settlement increase of $2,000-5,000. The insurer isn’t required to accept the independent appraisal, but it strengthens your position.
Invoke appraisal clause – Most auto insurance policies include an appraisal clause allowing either party to demand formal appraisal. You and the insurer each hire an appraiser, and those two appraisers select a neutral umpire. The three determine the ACV, and their decision is binding.
File a complaint – Contact the Maryland Insurance Administration if you believe your insurer is acting in bad faith or violating state regulations. State insurance commissioners investigate complaints and can pressure insurers to resolve disputes fairly.
Consider legal consultation – If the disputed amount is significant (several thousand dollars), consult an attorney specializing in insurance disputes. Many offer free consultations.
Challenging the total loss determination:
Disputing whether the vehicle should be totaled is much harder. If the math shows repair costs plus salvage value exceed 75% of ACV in Maryland, the insurer has clear grounds for the total loss decision.
You might challenge this if you believe the repair estimate is inflated or if you have evidence that repairs could be done for significantly less. Obtain independent repair estimates from body shops and submit them to your adjuster.
Realistically, if a qualified appraiser determined your car meets total loss criteria, fighting this determination rarely succeeds and delays your settlement. Focus instead on negotiating the best ACV possible.
What Do I Do After My Car Is Declared a Total Loss?
Remove all personal belongings from your vehicle immediately, surrender your title to the insurance company, coordinate vehicle pickup, and begin shopping for a replacement while managing the administrative tasks like canceling insurance and returning registration.
Immediate action items (within 24-48 hours):
- Remove personal property – Walk through your vehicle and collect everything. Check the trunk, under seats, glove compartment, door pockets, and visors. Take your garage door opener, toll transponder, and any custom accessories you want to keep.
- Photograph the vehicle – Take photos of the damage from multiple angles for your records, especially if you plan to dispute the valuation.
- Notify your lender – If you have a car loan, call your lender immediately to inform them of the total loss. Ask about the payoff process and whether they’re sending the title to the insurance company.
- Review the settlement offer carefully – Check the valuation report for accuracy. Verify that all options and features are listed correctly. Confirm the comparable vehicles used are truly similar to yours.
Within one week:
- Accept or negotiate the settlement – If the offer is fair, accept it promptly to start the payment process. If you disagree, submit your comparable vehicle research immediately to begin negotiations.
- Sign and return paperwork – Complete all required forms including title transfer, power of attorney, and settlement release. Missing signatures delay your payment by days or weeks.
- Coordinate vehicle removal – Confirm pickup arrangements with your insurance company. If the vehicle is at a storage facility, ensure pickup happens before you start accruing personal responsibility for storage fees.
- Cancel or adjust your auto insurance – Don’t cancel your insurance until the claim is fully settled and you’ve received payment. Once settled, call your insurer to cancel coverage on the totaled vehicle or transfer coverage to a replacement vehicle.
If you’re shopping for a replacement and may not buy immediately, keep liability coverage active. Dropping all coverage creates a gap that increases your rates when you reinstate.
Maryland DMV title surrender:
If you owned the vehicle outright (no loan), you must sign the title over to your insurance company. The insurer provides instructions on how to complete the title transfer.
If you’ve lost your title, apply for a duplicate through the Maryland MVA. You can request this online, by mail, or in person. The fee is $20 and processing takes 7-10 business days. Your settlement may be delayed until the duplicate title arrives.
Return your license plates – Maryland requires you to return license plates to the MVA if you’re not transferring them to another vehicle. You can return plates at any MVA branch office or mail them to:
Maryland Motor Vehicle Administration Vehicle Registration Division 6601 Ritchie Highway NE Glen Burnie, MD 21062
Cancel your registration – Contact the MVA to cancel your vehicle registration. This prevents you from owing registration renewal fees for a vehicle you no longer own.
Gap insurance claim (if applicable) – If you have gap insurance and owe more than your vehicle’s ACV, file a gap claim immediately. Contact your gap insurance provider (this may be your auto insurer, your lender, or the dealership where you purchased gap coverage).
Provide them with the total loss settlement letter showing the ACV and your current loan payoff amount. Gap insurance typically pays within 2-3 weeks of receiving complete documentation.
Shopping for a replacement vehicle:
Start shopping as soon as your total loss is declared. Don’t wait for the settlement check to arrive. Research vehicles in your price range, get pre-approved for a loan if you’ll need financing, and identify several candidates.
If your settlement includes positive equity, that becomes your down payment. If you have negative equity (even after gap insurance), factor that into your budget for the replacement vehicle.
Rental car coverage – If your policy includes rental reimbursement, it typically covers you for a set number of days after the total loss declaration (often 3-5 days after settlement). Check with your adjuster about rental coverage specifics.
Rental coverage ends when you receive your settlement payment or after the maximum covered days, whichever comes first. Plan your vehicle replacement timeline accordingly.
Tax implications – Total loss settlements are generally not taxable income because you’re being compensated for a loss, not gaining income. However, if you claimed a casualty loss deduction on your taxes for the accident, and later receive an insurance payout, you may need to report the recovery. Consult a tax professional if you’re unsure.
Important timing note – The faster you complete these administrative tasks, the faster you receive your settlement. Every delay in returning paperwork, obtaining a duplicate title, or coordinating vehicle pickup extends the process.
Most people receive their settlement check within 2-3 weeks of accepting the offer if they handle all requirements promptly.
Bottom Line
A total loss claim occurs when repair costs exceed your vehicle’s value or your state’s threshold percentage (75% in Maryland). You’ll receive the car’s actual cash value minus your deductible, with your lender paid first if you have a loan. The process takes 2-4 weeks on average.
You can dispute the valuation if you have evidence of higher value, and you can keep the vehicle through salvage retention if it makes sense for your situation. Remove personal belongings immediately, complete all paperwork promptly, and coordinate vehicle removal to avoid storage fees and expedite your settlement.
Need Help Transporting Your Total Loss Vehicle?
Geyers Towing provides professional total loss vehicle transport throughout Maryland. We work directly with insurance companies to move your totaled vehicle from accident scenes, storage facilities, or your property to designated salvage yards. If you’re retaining salvage, we’ll transport your vehicle safely to your preferred location.
Our team understands insurance requirements and documentation, making the process seamless while helping you avoid costly storage fees. Available 24/7 across Maryland including I-95, I-270, and the Baltimore Beltway. Contact Geyers Towing for immediate total loss vehicle transport.
