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. Title scams abound, so it’s very important to understand exactly what a title is and why you would sign it over to someone else.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

UPDATED: May 19, 2022

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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 you have a totaled vehicle. So, what do car insurance companies consider a totaled car?

There are title scams everywhere, 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.

Before discussing the circumstances that warrant signing a title over, you should at first know what a car title is. Also known as a vehicle title or certificate of title, it is the document that certifies the vehicle’s registered owners. However, just because you bought the car doesn’t automatically make you the owner.

If you paid the car in full, you would have to acquire the vehicle title by going to your local department of motor vehicles (DMV). You might also mistake the car title for the car registration. The registration certifies that you are authorized to drive the vehicle. It doesn’t prove vehicle ownership.

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How to Get Vehicle Titles and Car Insurance Coverage

When you buy a new car, the dealer can often help in processing the paperwork for the license plates, vehicle title, and title fees.

If you are buying a used car from a private seller, you and the original owner will need to file the transfer of title and pay the title transfer fees to reassign the original title to your name.

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 your 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 lienholder 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 lienholder, 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 rented for an extended time.

When should you sign your 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.

You may end up with a totaled car title transfer in the event that your car becomes 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 before 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. That way, you won’t get a lower settlement amount.

Typically you can only do this if you can show legal documents 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. At this point, they have technically bought your car from you.

What is the difference between signing the title and releasing the car to an insurance company?

Let’s say another driver caused the totaled vehicle. In this case, the one who usually shoulders the costs isn’t your insurance company but the other driver’s. They’d usually approach you with a settlement offer, which indicates not only the settlement amount but other stipulations to settle the claim. This instance is called a release.

By releasing the car to the insurance company, you are also foregoing filing a lawsuit. So when the other driver’s insurance company submits a settlement offer, make sure you are not getting the short end of the stick.

Make sure the offer doesn’t just cover the cost of the damaged vehicle but also applicable damages, such as bodily injury, lost wages caused by the injury, a medical expense not covered by your health insurance provider, etc.

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

Not sure how to sign over 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 lienholder is, and the Vehicle Identification Number (VIN).

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

  • The current odometer disclosure
  • 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 need to be involved in the transaction. Where to sign the car title will be indicated on the title itself.

The sale price in the case of a totaled car is the amount you received in settlement for your fair market value. As the seller, 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 before taking possession (typically, you’ll need coverage simply to drive it off the lot).

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
  • Knowing how to sign a title over and when it’s necessary is important
  • 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 process 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 your vehicle’s actual cash value (ACV). 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% 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
District of Columbia75%
New Hampshire75%
New JerseyTLF
New MexicoTLF
New York75%
North Carolina75%
North Dakota75%
Rhode IslandTLF
South Carolina75%
South DakotaTLF
West Virginia75%
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It can also vary by country, so if you’re wondering how to claim the total loss of a car from insurance in India, for example, you’ll find that the threshold for total loss is 75%, meaning that when the estimated cost of repair and retrieval of the vehicle is more than 75% of the insured declared value of the vehicle, it will be declared a total loss.

Do you need a lien release to transfer your 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 for a new vehicle.

Where do you sign a title for a total loss?

Titles are generally signed on the back of the document with a separate signature box — the signature of the buyer and the signature of 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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