When to Sign Your Title Over to Your Insurance Company

You’ll typically only sign your title over to your insurance company if your vehicle is declared a total loss. Estimated repair costs of between 50% and 100% of the car's actual cash value can result in the vehicle being totaled.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State...

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Reviewed byJoel Ohman
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UPDATED: Jun 29, 2020

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Sign Your Title Over To Your Insurance Company
Total Loss FactsFrom the Experts...
Vehicle total loss thresholds vary between 50 and 100% depending on the stateMatthiesen, Wickert, and Lehrer, Attorneys at Law
Insurance companies use the actual cash value of your vehicle to determine total lossNolo
Fair market value is the amount an asset (in this case a car) can be sold for in a traditional saleNational Associate of Insurance Commissioners
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The title to your car is important, as the holder of the title is generally recognized by the law to be the owner of the car.

There are several reasons you may sign your title over to someone else, but the only circumstance in which you typically sign your title over to your insurance company is if it’s a total loss, so what do car insurance companies consider a totaled car?

Title scams abound, so it’s very important to understand exactly what a title is, why it would get signed over to someone else, and how to sign a car title over to insurance or someone else. Read this article to learn more.

To make sure you’re insured with the best company for your needs in the event that your car is totaled, use your ZIP code to compare rates today.

Vehicle Titles and Car Insurance Coverage

When do you have a vehicle title? How does it affect your car insurance coverage? When should you sign your vehicle over to your insurance company? Read through the next few sections to learn more.

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When is a vehicle title in my name?

When you buy a car, you may or may not receive the title for the car. It all depends on if you purchase a car outright or arrange for financing options.

When you finance the purchase of a car your lender will hold the title of the car, showing itself as the lien holder on it. This simply means they have a lien on your car until the debt is paid in full.

Once you pay your debt in full, the title will be released to you and they will be removed as the lien holder, clearing your car title. This is important because a lienholder will require coverage that affects insurance costs.

If you pay for your car in full upfront, the title will be yours free and clear, provided the car has no other liens on it.

In some cases, there could be liens on a pre-owned vehicle. Before buying a car and conducting a used car dealer title transfer, be sure all liens are removed from the title.

If you lease a car you will never receive the title since a leased car is not purchased, but merely rented for an extended time.

When should I sign my vehicle title over to the insurance company?

Unless your car insurance company is also financing your car loan, which is highly unlikely, you will not typically sign over your car title to them. In general, the only time you will sign your car title over to anyone is when you sell it or give it away.

What happens when a car is totaled? If your car is totaled for any reason that is covered by your insurance policy, then you will receive fair market value for your car from your car insurance company as a part of the total loss car insurance settlement. But what happens to the title when a car is totaled?

As a part of a total loss settlement, you’ll sign over your title to the car insurance company because they have paid you for your car in full and in return, they’ll take possession of your vehicle title.

If you feel your car insurance company is not paying you enough money for your totaled car, you may need to hold off signing over the title until you do some investigation (and possibly some negotiation with the insurer). Typically, a car insurance policy is only written to pay out benefits equivalent to the fair market value of your car.

The fair market value of your car will take into consideration:

  • The make and model of your car
  • The age
  • The mileage
  • The condition
  • Any extras that were installed either at the factory or aftermarket

Whatever the fair market value is deemed to be just prior to your accident is the amount for which the car insurance company will reimburse you. In some cases, you can negotiate with your car insurance company if you can prove your car was worth more than they estimated. Watch this video for more information:

Typically you can only do this if you can show documentation that there is an error in the paperwork, such as incorrect mileage or vehicle condition, or if the fair market value from Kelly Blue Book is higher than what the insurance company offered as a settlement.

Most legal systems will rely on the Kelly Blue Book price, so if you went to court that would likely be the dollar amount used for settlement.

No matter how much the dollar amount is, once you agree and receive the settlement from the insurance company you will need to sign over the car title to them, since at this point they have technically bought your car from you.

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How do you sign over a title to an insurance company?

How do you transfer a car title? The car title and transfer process differs slightly from state-to-state, but the main components are the same. A car title will show you who owns the car, who the lien holder is, and the Vehicle Identification Number (VIN).

The title also has a place to record the buyer and seller of the car, along with pertinent details including:

  • The odometer reading
  • The date of the sale
  • The transaction cost

In order to sign over the title to your car insurance company, you need to have the title in hand. If your car is still being financed, your lender will have the title and will need to be involved in the transaction as well. Where to sign the car title will be indicated on the title itself.

The cost of the sale in the case of a totaled car is the amount you received in settlement for your fair market value. This video explains what it means when your car is totaled.

As the seller of the car, you will not be responsible for paying any taxes on this transaction.

Once the title is signed by both the seller (you) and the buyer (the car insurance company) the transaction is complete and the title is handed over to the car insurance company.

Avoid scams by always keeping your title in a safe place and never giving your title to anyone unless you are actually selling the car to that someone (or company), and only after you have received the payment in full.

Be sure to keep the insurance policy active for your car until the sale is complete, If you are buying another car as a replacement, you should purchase car insurance for it prior to taking possession (typically you’ll need coverage simply to drive it off the lot).

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The Bottom Line for Signing Your Title Over to the Car Insurance Company

To summarize what we’ve talked about:

  • If your car is totaled, signing over your title is part of releasing the car to the insurance company once a settlement agreement has been reached
  • You can determine the market value of your vehicle by using Kelly Blue Book
  • As the seller, you are not responsible for any taxes

In most cases, the only time you’ll be transferring your title over to your insurance company is if your vehicle is totaled, and you choose to accept the settlement for it, rather than keep the car. However, if you sell or give your vehicle to anyone, you’ll also need to conduct a title transfer to the buyer.

Frequently Asked Questions: Signing Your Title Over to an Insurance Company

Still have questions about signing over your title to the car insurance company? Read through these frequently asked questions to learn more.

How do you sign a car title over to someone else?

You’ll need the same information to transfer a title to a buyer that you do when you transfer a title to your insurance company (this includes how to transfer a car title to a family member or friend). Once the relevant information has been filled out, you’ll sign as the seller releasing ownership to the buyer, and the buyer will then need to take the signed title to the DMV to obtain a new registration and vehicle title.

Can you transfer a car title without insurance?

You don’t have to have insurance to transfer a car title. Technically, car insurance is only required if you plan to drive a vehicle. However, it is recommended that you maintain coverage on your vehicle until you complete a title transfer.

What does it mean when my vehicle is totaled?

After an accident, a claims adjuster compares the estimated cost to repair your vehicle plus the salvage value to the actual cash value (ACV) of your vehicle. They use this information to determine whether it is more cost effective to total the vehicle (also referred to as declaring a total loss) than to pay for repairs.

This process is called the total loss formula (TLF), and in the United States, the TLF threshold is defined by the state, so it varies depending on where you live and can be anywhere from 50 to 100 percent of the vehicle’s ACV. Take a look at this table to see the thresholds in your state.

Vehicle Total Loss Thresholds by State
StatesTotal Loss Threshold
Alabama75%
AlaskaTLF
ArizonaTLF
Arkansas70%
CaliforniaTLF
Colorado100%
ConnecticutTLF
DelawareTLF
District of Columbia75%
Florida80%
GeorgiaTLF
HawaiiTLF
IdahoTLF
IllinoisTLF
Indiana70%
Iowa50%
Kansas75%
Kentucky75%
Louisiana75%
MaineTLF
Maryland75%
MassachusettsTLF
Michigan75%
Minnesota80%
MississippiTLF
Missouri80%
MontanaTLF
Nebraska75%
Nevada65%
New Hampshire75%
New JerseyTLF
New MexicoTLF
New York75%
North Carolina75%
North Dakota75%
OhioTLF
Oklahoma60%
Oregon80%
PennsylvaniaTLF
Rhode IslandTLF
South Carolina75%
South DakotaTLF
Tennessee75%
Texas100%
UtahTLF
VermontTLF
Virginia75%
WashingtonTLF
West Virginia75%
Wisconsin70%
Wyoming70%
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It can also vary by country, so if you’re wondering how to claim total loss of a car from insurance in India, for example, you’ll find that the threshold for total loss is 75 percent, meaning that when the estimated cost of repair and retrieval of the vehicle is more than 75 percent of the insured declared value of the vehicle, it will be declared a total loss.

Do you need a lien release to transfer title?

The options for transferring a title on a car with a lien depend on the circumstance such as buying or selling privately vs. trading a car under lien in on a new vehicle.

where do you sign a title for a total loss?

Titles are generally signed on the back of the document with separate signature lines for the buyer and the seller.

Before you go, use your ZIP code to get a free quote on car insurance so you’re prepared with the best coverage regardless of what happens when you’re out on the road.

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