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Insuring a Salvage Title Vehicle

Insuring a Salvage Title Vehicle
Catherine Hiles
Updated August 26, 2021
4 Min Read

Most cars are sold with a clean car title. But if your car has been involved in a serious wreck, that clean title may be replaced with a salvage title. A salvage title is given to a vehicle that has been so damaged that it would cost more to repair it than it is worth at current value.

Insuring such a car can be difficult and expensive, but that doesn’t mean it’s impossible. Read on to learn more about salvage title vehicles and how to insure one.

What is a salvage title vehicle?

A salvage title vehicle is one that has been deemed too damaged for repair — in other words, a total loss. You might think that this type of vehicle should go straight to the scrapyard, but some are resold with a salvage title, which replaces a clean title on this type of vehicle. 

Most drivers won’t want to bother buying a salvage title vehicle. Those that do may be skilled mechanics or body shop owners who can perform repairs themselves (and therefore avoid paying for labor) or classic car enthusiasts who want to restore a damaged vintage vehicle to its former glory.

When does a total loss occur?

A car is considered a total loss when it would cost more to repair it than the car is worth. Each state defines it differently, but in general the repair must be more expensive than a specified percentage (determined by the state) of the car’s cash value. That percentage is usually between 60 and 90.

A salvage title vehicle might be a newer car that has been severely damaged in an accident and whose structural integrity is damaged. Or it might be an old car with a value that’s so low, it’s not worth repairing minor damage after an accident. But if you have the required skill set, you might choose to buy this type of vehicle, repair it yourself for free, and use it as your daily driver once it’s safe to drive.

Can you insure a salvage title car?

It can be difficult to insure a salvage title vehicle. Most established insurance companies don’t want to take on the liability of a car that has been damaged beyond repair — especially if it has been deemed unroadworthy in the past.

You may find it easy enough to take out personal liability and property damage insurance on a salvage title vehicle. That insurance will pay out if you are at fault in an accident. Personal liability insurance will pay for medical and other expenses if someone else is injured in an accident you cause. Property damage coverage pays to fix any damage you’ve caused to personal or public property (such as another vehicle or a lamppost).

But getting physical damage coverage on a salvage title vehicle can be much harder. That’s because insurance companies don’t want to be liable for a vehicle that has been damaged previously. 

You will find that insurance premiums are much higher for salvage title vehicles than for vehicles with clean titles. That’s because the insurance company considers this type of car a much higher risk. Since it’s more likely you’ll make a claim and cost the insurance company money, you might find that your insurance premiums are more than what you paid for the car in the first place. It’s important to know whether or not you can afford insurance for a salvage vehicle before you spend money on one. The last thing you want is to buy a salvage vehicle for cheap, only to find that the cost of insurance is much higher than you can afford.

In order to take out any type of insurance on a car that’s been deemed a total loss, you’ll need to get a rebuilt title in place of the salvage title. In order to get one of these, you’ll need to provide proof that your car is roadworthy once it has been repaired.

Requirements for insuring a salvage title car

While it can be difficult to insure a rebuilt salvage title car, it’s not impossible. If you can meet the following requirements, you’ll find it much easier to get coverage.

Clean mechanical inspection

First, you will need to provide a detailed inspection report of the vehicle by a certified mechanic. The document should state that the vehicle is safe to operate on the road and is in good condition.

Inspection by an insurance agent

Next, the insurance company will send an agent to inspect the vehicle in person. The agent will look for any existing physical damage and make a note of it in your policy for future reference.

Current photos of the vehicle

Finally, you must provide current images of the vehicle taken from multiple different angles and showing different views. You may be asked to provide videos in addition to the photos. If you were to make a claim, the insurance company would use these photos and videos to determine what damage was existing before the accident, and they would not pay to repair this.

Can you have full coverage on a salvage vehicle?

If you can provide adequate proof that your vehicle is safe to drive, you should be able to find at least minimum liability coverage for your salvage vehicle. However, getting comprehensive coverage or damage coverage will be much harder.

If all you can get is liability coverage, it won’t cover the repairs to your car if you are involved in a collision or accident.

Pros and cons of a salvage title

Salvage title vehicles are not for everyone, but they do have their benefits for those willing to take them on. Here are some of the pros and cons of owning this type of car.

Pros

  • You can buy a salvage title vehicle for very little, which can be a benefit if you need a car but don’t have a lot to spend.
  • You could find an older car with minimal damage that won’t cost an arm and a leg to repair. An example is hail damage, which is purely cosmetic and much less costly to fix than structural damage.
  • If you can’t find one to fix up and drive, you could buy one and sell it for parts. That money could then go toward buying a car that is drivable. 

Cons

  • You might not realize the full extent of the damage just by looking at the car, which means you could end up with a car you can’t afford to repair.
  • Even if you do know the extent of the damage, the repairs may end up costing more than you expect, turning your cheap car into a money pit.
  • Insurance, if you can get it, can be prohibitively expensive.

Summary

A salvage title vehicle may be a good buy if you can find one with minimal or cosmetic-only damage, but when it comes time to insure it you may have difficulty or be faced with extremely expensive insurance premiums. But if you can find good coverage, a salvage title vehicle may be an affordable option for you.

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