What to Do If Your Car Is Totaled in Tennessee

What Happens If Your Car Is Totaled in Tennessee? Salvage Value Explained

If your car’s been in a serious accident and your insurance company tells you it’s a total loss, you might be offered a settlement that includes “salvage value.” But what does that actually mean for you — and what are your options?

At Holt Insurance Agency, we help Tennessee drivers understand their coverage and confidently navigate claims. Here’s what you need to know about salvage value, total loss vehicles, and your choices as a policyholder in Tennessee.

When Is a Car Considered a Total Loss?

In Tennessee, a vehicle is typically declared a total loss when the cost to repair it exceeds 75% of its pre-accident market value. For example, if your car was worth $10,000 and it would cost $7,500 or more to fix, your insurance company will likely total it and offer you a settlement.

This process helps prevent unsafe or overly expensive repairs — but it can be overwhelming if you’re not sure what happens next.

What Is Salvage Value?

When your insurer totals your car, they offer to pay you its Actual Cash Value (ACV) — basically, what the car was worth before the accident.

If they keep the vehicle, they’ll sell it for parts or scrap. The money they expect to make from that is called the salvage value.

You have the choice to either:

• Surrender the car and receive the full payout, or

• Keep the car and receive a reduced payout — the ACV minus the salvage value.

Think of it like this: keeping the car is kind of like “buying it back” from your insurance company using part of your claim money.

Should You Keep the Vehicle?

Here are your two main options:

Option 1: Take the Full Settlement

• You hand over the vehicle.

• The insurance company pays the full ACV (minus your deductible).

• They handle the salvage title and towing.

• You can use the money toward a replacement vehicle.

Option 2: Keep the Vehicle (Owner Retention)

• You keep the damaged vehicle.

• Your payout is reduced by the salvage value.

• You must apply for a Salvage Certificate with the state.

• The car can’t be driven until it’s rebuilt and re-registered with a Rebuilt Title.

Many people choose to keep the car if:

• The damage is cosmetic (e.g., hail or body damage).

• They want to repair it themselves.

• The car has sentimental value.

Rebuilding a Salvaged Vehicle in Tennessee

If you decide to keep and repair the car, here’s what’s required:

1. Apply for a Salvage Title through the Tennessee Department of Revenue.

2. Complete repairs and keep all receipts.

3. Submit photos and documentation for an official state inspection.

4. Pass inspection, then apply for a Rebuilt Title.

5. Only then can the car be legally registered and driven.

Until it’s fully rebuilt, the car can’t be used on public roads.

Can You Insure a Salvage or Rebuilt Car?

You can’t insure a salvage vehicle until it’s repaired and has a Rebuilt Title.

After that:

• Liability coverage is usually available.

• Full coverage (comprehensive & collision) may be harder to get, or cost more.

• Insurance payouts in future claims may be reduced because of the vehicle’s history.

Always tell your insurance company if your vehicle has a rebuilt title — they’ll see it when they check the VIN anyway.

Extra Tip: Tennessee Sales Tax Benefit

If your car is totaled and you don’t keep it, Tennessee law requires your insurer to pay you the sales tax and title fees for a replacement vehicle — a nice benefit that helps reduce your out-of-pocket costs.

Final Thoughts

Dealing with a totaled car and salvage value might sound complicated, but with the right guidance, it doesn’t have to be stressful.

At Holt Insurance Agency, we’re here to help Tennessee drivers understand their options and make smart decisions after an accident. Whether you’re filing a claim or just want to review your coverage, our team is here for you.

Need help after a total loss? Call us today or send us a message — we’ll walk you through every step.