Total Loss Threshold

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Total loss, salvage and rebuilt titles, explained

A car is wrecked, the estimate comes in high, and suddenly there are three unfamiliar words on the table. This guide walks through them in order.

In plain English

Everything below is our explanation, and each point rests on a published source: a state’s code, a motor vehicle agency, or an insurance regulator. Open “The official words” under any point to read the source itself. Where a source speaks for one state only, we say which.

What does “total loss” mean?

Maryland’s insurance regulator defines it for its own state: a total loss means the cost to repair the vehicle is 75 percent or greater than the vehicle’s fair market value immediately before the loss.

The regulator’s words

“A total loss means that the cost to repair the vehicle is 75 percent or greater than the fair market value of the vehicle immediately prior to the loss.”

That figure is Maryland’s. Each state’s own text is different, and some give no figure at all; the kinds of rule are below.

What does the insurer pay on a total loss?

In Maryland’s regulator’s words, when a vehicle is determined to be a total loss the insurance carrier makes a settlement offer reflecting the vehicle’s actual cash value (ACV) immediately before the loss. California’s insurance department says a total loss settlement must reflect the value of a comparable vehicle of like kind and quality and must include taxes, license and transfer fees.

The regulator’s words

“if your vehicle is determined to be a total loss, the insurance carrier will make a settlement offer reflecting the actual cash value (ACV) of the vehicle immediately prior to the loss.”

“If you suffered a total loss, settlement must include taxes, license and transfer fees. The settlement must reflect the value of a comparable vehicle of like kind and quality.”

The four kinds of state rule

State title laws answer “when is a damaged vehicle salvage?” in four different ways. We sorted the 49 states we could source into these kinds; 24 give a percentage, 3 set repair cost against the value itself, 1 brings salvage value into the sum, and 20 give wording with nothing to calculate.

  • Percentage in the text

  • 60%
  • 65%
  • 70%
  • 75%
  • 80%
  • 100%

  • No percentage

  • Repair cost vs. value
  • Formula with salvage value
  • Wording only
  • No damage definition found
  • Not sourced

A percentage

A damaged motor vehicle that is subject to registration counts as a wrecked or salvage vehicle when the cost of repair is more than seventy percent of its fair market value before it was damaged. That value is worked out under rules adopted by the department. Iowa’s page

The official words

““wrecked or salvage vehicle” means a damaged motor vehicle subject to registration for which the cost of repair exceeds seventy percent of the fair market value of the vehicle, as determined in accordance with rules adopted by the department, before the vehicle became damaged.”

Repair cost against value

Utah’s definition covers a vehicle damaged by collision, flood or other occurrence so much that the cost of repairing it for safe operation is more than its fair market value. It prints no percentage. It also covers a vehicle that an insurer or another state or jurisdiction has declared a salvage vehicle, as long as it is not barred from further registration and titling. Utah’s page

The official words

“damaged by collision, flood, or other occurrence to the extent that the cost of repairing the vehicle for safe operation exceeds its fair market value; or”

“that has been declared a salvage vehicle by an insurer or other state or jurisdiction, but is not precluded from further registration and titling.”

A formula with salvage value

For a late model vehicle, salvage means one an insurance company acquired in the claims process (other than a stolen vehicle), or one damaged so much that its estimated repair cost would be more than its actual cash value minus its current salvage value. Towing, storage, rental vehicle charges and diminished value payments are left out of the repair cost. Virginia’s page

The official words

“"Salvage vehicle" means (i) any late model vehicle that has been (a) acquired by an insurance company as a part of the claims process other than a stolen vehicle or (b) damaged as a result of collision, fire, flood, accident, trespass, or any other occurrence to such an extent that its estimated cost of repair, excluding charges for towing, storage, and temporary replacement/rental vehicle or payment for diminished value compensation, would exceed its actual cash value less its current salvage value;”

Wording only

Ohio’s law sets no percentage in the section we read. It applies when an insurance company declares a vehicle economically impractical to repair and has paid an agreed price to buy it from an insured owner or a claimant owner. The insurance company then follows the steps the law lays out. Ohio’s page

The official words

“When an insurance company declares it economically impractical to repair such a motor vehicle and has paid an agreed price for the purchase of the motor vehicle to any insured or claimant owner, the insurance company shall proceed as follows:”

Every state, listed by kind

Who decides that a car is a total loss?

In the regulator pages we read, the insurance company does. Maryland’s regulator writes of vehicles “determined by the insurance company to be a total loss”, and says the insurer is permitted to add costs such as a rental vehicle and potential hidden damage to the repair cost when it works out Maryland’s 75 percent figure.

The regulator’s words

“Vehicles that are determined by the insurance company to be a total loss must be labeled as "salvage vehicles."”

“Your insurance company is permitted to add additional costs such as the cost of a rental vehicle and potential hidden damage to the cost to repair your vehicle when calculating the 75 percent value.”

Can an insurer total a car below the state’s percentage?

It has happened, on the record. In a New York Insurance Department opinion, a car took damage of $16,800, which was 60% of its cash value, and the insurer chose to consider it a total loss. The opinion notes that the department’s salvage branding rule applies where repair cost exceeds 75% of actual cash value, so that rule did not apply to this car.

The regulator’s words

“The vehicle received damage in a collision totaling $16,800 (60% of the vehicle's cash value). The insurer chose to consider the vehicle a total loss.”

“concerns salvage vehicle branding and applies to losses where the cost to repair the damaged vehicle exceeds 75% of the vehicle's actual cash value.”

That is why the calculator on this site reports only where two numbers sit against a state’s text. The text is about titles; the decision on a claim is the insurer’s, under the policy.

What if the owner thinks the offer is too low?

Maryland’s regulator says an owner who thinks the car is worth more than the offer can negotiate with the insurance company, and must provide supporting documentation for a counteroffer, for example quotes from car dealers or prices and ads for similar vehicles.

The regulator’s words

“If you think your car is worth more than what the insurance company offered, you can negotiate with your insurance company.”

“It's important to know that you must provide supporting documentation for your counteroffer. You can do this by getting quotes from car dealers or viewing prices and ads online for similar vehicles.”

Can the owner keep the car?

Maryland’s regulator describes an owner deciding to keep the salvage vehicle: the settlement offer is then reduced by the vehicle’s salvage value. California’s insurance department says that when the owner retains the salvage, deductions from the settlement for salvage must be fair, measurable, and discernible.

The regulator’s words

“If you decide to keep the "salvage vehicle," your settlement offer will be reduced by the vehicle's salvage value.”

“If you retain the salvage, deductions from the settlement for salvage must be fair, measurable, and discernible.”

What does “salvage” mean?

Maryland’s regulator says vehicles that the insurance company determines to be a total loss must be labeled as salvage vehicles. California’s insurance department uses “salvage value” for the remaining value of a damaged vehicle that is determined to be a total loss.

The regulator’s words

“Vehicles that are determined by the insurance company to be a total loss must be labeled as "salvage vehicles."”

“This is the remaining value of your damaged vehicle if your vehicle is determined to be a total loss.”

How does a salvage car get back on the road?

With a new title that says what happened to it, after the state has looked the car over. The name of that title, who does the looking and what it costs change from state to state. We found an inspection or examination step for 45 of 49 states and a fee for 37. Ohio is a clear example:

  1. The state highway patrol inspects the vehicle. The inspection establishes proof of ownership and checks the motor number, the vehicle identification number, and the documentation or receipts for materials used in the restoration, which the owner presents at the inspection.

    The official words

    “Upon inspection by the state highway patrol, which shall include establishing proof of ownership and an inspection of the motor number and vehicle identification number of the motor vehicle and of documentation or receipts for the materials used in restoration by the owner of the motor vehicle being inspected, which documentation or receipts shall be presented at the time of inspection, the clerk, upon surrender of the salvage certificate of title, shall issue a certificate of title for a fee prescribed by the registrar.”

  2. The state highway patrol charges a fee of fifty dollars for each inspection.

    The official words

    “A fee of fifty dollars shall be assessed by the state highway patrol for each inspection made pursuant to this division”

  3. A receipt for the inspection is obtained at any Deputy Registrar location for a fee of fifty dollars, in addition to the deputy registrar fee.

    The official words

    “Obtain a receipt for the inspection at any Deputy Registrar location for a fee of fifty dollars in addition to the deputy registrar fee.”

  4. The State Highway Patrol completes a Salvage Inspection Form (HP106).

    The official words

    “The State Highway Patrol will complete a Salvage Inspection Form (HP106)”

  5. After the inspection, when the salvage certificate of title is surrendered, the clerk issues a certificate of title for a fee set by the registrar.

    The official words

    “Upon inspection by the state highway patrol, which shall include establishing proof of ownership and an inspection of the motor number and vehicle identification number of the motor vehicle and of documentation or receipts for the materials used in restoration by the owner of the motor vehicle being inspected, which documentation or receipts shall be presented at the time of inspection, the clerk, upon surrender of the salvage certificate of title, shall issue a certificate of title for a fee prescribed by the registrar.”

  6. The title bears the words "REBUILT SALVAGE" in black boldface letters on its face.

    The official words

    “shall bear the words "REBUILT SALVAGE" in black boldface letters on its face.”

Inspections, fees and forms for every state · Find a state

Where this guide stops

It explains what official pages say. It does not know a particular policy, vehicle or claim, and it is not advice. The regulator sources above speak for Maryland, New York and California; other states’ insurance regulators publish their own guidance. The National Association of Insurance Commissioners’ auto shopping guide refused our request, so nothing from it is used here.

Reference only, not legal or insurance advice. Confirm with the agency. Full statement

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