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If you own a salvage vehicle for any of those reasons, you may find that many insurance companies only offer limited coverage for salvage cars, or won't insure them at all.
If you are thinking about purchasing a vehicle with a salvage title and need information on how to get car insurance, continue reading.
What Is a Salvage Vehicle?
When an auto insurance company determines that the cost of the repairs (e.g., after an accident) is greater than the value of the car, they write the car off as a total loss.
The amount of your insurance settlement, if any, will be determined by your auto insurance policy and your car’s actual cash value (the cost of the vehicle if purchased new, minus any depreciation).
In most states, the car insurance company or the owner is required to notify the DMV that the automobile has been totaled. Depending on the individual state, the car will then be issued a "salvage title" or "salvage certificate" that notifies any buyers that an insurance company has deemed the car a “salvage vehicle.”
What a Salvage Certificate Means
A salvage certificate means that the car cannot be sold, driven, or registered in its current condition. A certificate is not a title.
If the car is repaired - for example, by a dealer who specializes in redeeming salvage vehicles - the owner can apply for a new title, but the title will always carry a designation that the vehicle has been salvaged or rebuilt. For example, the title may say something like “Revived Salvage.”
Once a car has acquired a salvage designation, your options for insuring the vehicle become much more limited.
NOTE: This is NOT the same as the designation that a car is "unrepairable." In most states, an unrepairable car can only legally be sold for parts or scrap. Before you start looking for car insurance, be sure you understand exactly what designation your vehicle carries.
Pros and Cons of Salvage Vehicles
- Attractive price. Vehicles that have been salvaged often carry sticker prices that are a fraction of the cost of similar cars with a clean title.
- Opportunity to save money. If you can repair your car after an accident in which it’s declared a total loss, you can save money on buying a new vehicle.
- Enjoyment. If your hobby is rebuilding cars, buying a salvage vehicle is a good bet.
- Lowered safety. A salvage vehicle may have damage that can compromise your safety.
- Hidden damages. You might find that a salvage vehicle has more wrong with it than you initially noticed.
- Difficulty in finding car insurance.
- Additional documentation requirements, including safety and mechanical inspections, before registration or insurance policies can be effected.
Before You Look for Auto Insurance
Before you purchase a salvage title vehicle, make sure you know the answers to the following questions:
- Why was the car totaled?
- Is the car a "salvage" or "non-repairable" vehicle?
- What are the laws in your state regarding insurance and registration?
- Can you get comprehensive coverage, or only liability coverage?
- Can you afford to pay for repairs out of pocket if your car is damaged in an accident?
Get a full accident report and, if you can, the original repair estimate, as well as documentation of all repairs.
Insuring a Salvage Vehicle
In many states, you'll have to jump through some hoops to get a legal title, registration, and insurance for a car that has been branded as salvage. The California DMV, for example, requires an application for title that includes the cost of all repairs, proof of ownership, a vehicle inspection by the California Highway Patrol, and a California brake and light inspection certificate.
Beyond the state regulations, however, you'll also have to deal with insurance company rules. For example, some car insurance companies will not insure a car that they have declared totaled but will sometimes offer coverage for vehicles that have been totaled by other insurance companies.
Many companies limit the coverage in one or more ways, including only providing liability insurance, or excluding coverage related to the original damage to the car.
These steps can help you find the most reasonable coverage for your situation:
- Follow your state laws to get the documentation you need to prove your vehicle is safe to drive.
- Get the original repair estimate if you can. It will detail the damage to the car. When you talk to an insurer, be prepared to show proof that all the original damage has been adequately repaired.
- Check with your current insurer if you have one. Your auto insurance agent will be able to tell you if your car insurance company extends coverage for salvage vehicles and under what circumstances.
- Check with other insurance companies. Some companies will insure vehicles that have been totaled by other insurers.
- Look for "salvage insurance" online. There are a number of insurance companies that specialize in policies for hard-to-insure vehicles and drivers.
- Opt for liability insurance only.
- Expect to pay higher premiums if you can find an insurance company that will extend coverage for collision.
- Read the policy carefully for any limitations to your coverage.
- Always comparison-shop to get the best possible coverage at the best possible price.
Amanda Lautieri Limited Lines Auto Agent