Your insurer totaled your car: keep it, or take the payout?

Which one is right comes down to three numbers: the full payout, the payout if you keep the car, and what you still owe on any loan. Get all three in writing before you decide.

What "totaled" means where you live

There is no single national line. Maryland's insurance regulator puts it at repairs costing "75 percent or more" of what the car was worth on the market just before the loss, and it lets the insurer add rental costs and likely hidden damage to the repair figure (Maryland Insurance Administration).

Other states set the bar in different places. Florida's statute puts the mark at 80 percent, measured against what a comparable replacement car costs (Fla. Stat. 319.30). Nevada uses 65 percent (NRS 487). Plenty of states, Ohio and Massachusetts among them, use no percentage at all: the car is salvage once the insurer decides repair isn't worth it. The full list is in the table further down.

What that means for you: a car can be totaled over damage that looks fixable, especially an older car with a low market value. That doesn't make the decision wrong. It does mean the car you keep may still run.

The two checks your insurer can write

Take the full payout. You sign the title over and the insurer takes the car. Check your state's rules, since some, like DC, still put salvage duties on the owner. In Maryland the cash offer must include "all applicable taxes and registration fees," and it has to reflect the retail value of a substantially similar car, taken from a recognized valuation guide or a dealer quote. As a rule, the insurer gets 10 days to put that offer on the table (MIA).

Keep the car. The check gets smaller. Maryland's rule is plain: if you keep a total-loss vehicle labeled salvage, the offer "is reduced by the vehicle's salvage value" (MIA).

Ask for both figures side by side. The gap between them is what keeping the car costs you.

What happens to the title if you keep it

Keeping a totaled car usually means a salvage title, and each state has its own paperwork. A few examples from state law and agency pages:

• Delaware: an owner-retained salvage car "cannot be driven" until it is rebuilt, inspected by the State Police, safety inspected and retitled (Delaware DMV).
• North Carolina: you keep the car by filling out an owner-retained salvage form that the insurer gives you (G.S. 20-109.1).
• Kansas: if you kept the car after a salvage settlement, you file affidavit TR-13 with a letter from the insurer (Kansas DOR).
• New Mexico: an owner who keeps the car after a payout must mark the title SALVAGE or NONREPAIRABLE, with lettering no smaller than half an inch (NM MVD).
• Montana: you surrender the title and get a salvage certificate for $5, after which the car is yours to hold onto, sell or get rid of (MCA 61-3-211).
• California: the DMV's procedures manual has a section for the notice of retention by owner, under Vehicle Code 11515 (DMV manual 19.045).
• Vermont: keep a car the insurer totaled and you must complete the rebuilt vehicle process (Vermont DMV).

Illinois is the exception to "you can usually keep it." After a total-loss payment the insurer owns the car as salvage, unless the damage was hail only or the car is nine model years old or older and you keep it by agreement (625 ILCS 5/3-117.1).

Some brands end the car's road life for good. Alabama's "Parts Only - Non-Rebuildable" brand means the car is basically only good for parts (Alabama DOR), and a California nonrepairable car "can never be titled or reregistered" (California DMV).

When you still owe on the loan

A loan changes the math. The CFPB says standard auto insurance pays only up to the value of the car, so if you owe more than that, the rest of the loan is not covered (CFPB).

Owing more than the car is worth is negative equity. In the CFPB's numbers, a $10,000 loan against a car worth $8,000 leaves a $2,000 hole (CFPB key terms).

Three things to check:

1. Your real payoff. The payoff can differ from the balance on your statement because of how interest is figured, late fees or other charges (CFPB). Ask the lender for the payoff on a specific date.
2. Whether you have GAP. GAP is an optional product that covers the difference between what you owe and what the insurer pays if the car is stolen or totaled. When it is bought through a dealer, its cost is often rolled into the loan, so look at your loan paperwork even if you don't remember buying it (CFPB).
3. A GAP refund. If the loan ends early because you sell, refinance or pay it off, the CFPB says you may be owed a GAP refund. Whoever sold you the GAP can tell you, and so can the lender or the dealer.

If you plan to keep the car, remember that the smaller check still has to deal with the loan. Ask your lender how it handles a kept total loss before you agree to anything.

If the offer looks too low

Push back with evidence: listings or dealer quotes for cars like yours, with similar miles and options. Maryland's rule that the offer reflect a "substantially similar vehicle" gives you a yardstick to argue with (MIA).

If that goes nowhere, your state's insurance regulator is the next stop. Maryland drivers can call the Maryland Insurance Administration at 1-800-492-6116. Texas sends complaints to its Department of Insurance, known as TDI. The Office of Public Insurance Counsel says it is not the regulator and cannot take complaints, but its staff will answer questions about an auto policy or point you to the right office (Texas OPIC).

Total-loss and salvage rules, state by state

Each cell is the rule from that state's statute or agency page. "No percentage" means the insurer's or owner's call decides, not a repair-cost formula.

Keep and fix, keep and sell, or let it go

Take the full payout if the car was your daily driver, the loan is close to or above the payout, or your state makes the rebuild path long. It is usually the simplest choice.

Keep it and fix it only if you can do the work cheaply, the damage is mostly cosmetic, and you are ready for your state's rebuilt-title steps. Count the inspections and fees along with the parts. A brand can follow the car for good. In New Mexico, every later title stays salvage-branded.

Keep it and sell it if the reduced payout plus what the car brings as it sits beats the full payout. It can, when the insurer prices the salvage low. Before you agree, check what your state allows: in Montana, an owner holding a salvage certificate may sell the car, while some brands, like California's nonrepairable, mean the car can only go for parts or scrap.

If you've already kept it, or the insurer hasn't totaled it yet and you're deciding now: we buy whole non-running and junk cars, salvage titles included, and you can sell the whole car as it sits with free pickup anywhere in the US. (877) 421-6008