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Insuring a salvage title vehicle

Fact-checked with HomeInsurance.com

Buying a new car can be incredibly expensive, especially if you’re looking for a specific make and model. If you come across a vehicle with a salvage title, you might be pleasantly surprised at the price. But a salvage title doesn’t just mean you’re getting a great deal. There are a few downsides to buying a car with a salvage title, which might make you think twice about going through with the sale. 

What are salvage title vehicles?

When a vehicle is totaled—or damaged beyond repair—it’s usually given a salvage title. A salvage title indicates that a car has excessive damage, and was deemed a total loss by the owner’s auto insurance company. There are a number of situations that can cause a salvage title, but it usually happens after a major accident.

Anyone can purchase a car with a salvage title. Most commonly, salvage cars are purchased by auto body shops, home mechanics and people who enjoy restoring old or damaged cars. If you find a salvage car for sale, it’s up for grabs. But you should think carefully about the pros and cons of buying a salvage car before you hand over the money.

The pros of a salvage title

Cars that have a salvage title are generally extremely inexpensive, which is a major draw to people who are car shopping on a budget. In fact, salvaged cars are usually much cheaper than even a used car would be. 

You might be inclined to purchase a car with a salvage title to use the parts for another auto repair project. For instance, say you’re looking for a new engine, and you happen to find a $300 salvage title car with brand new components. You can pay the $300 for the entire car, and only use the parts you need.

Other drivers buy salvage titles because they think they can restore the car to adequate working conditions. The car probably won’t be “good as new,” but if you do the repairs correctly, it can get you from one point to another for very little money.

Salvage titles aren’t always irreparable. Usually, it just means that the previous owner’s insurance company wouldn’t cover the cost of repairs, and it was cheaper to buy a new car. But before you buy a salvage title, it’s important to have the car evaluated by a professional mechanic to rule out any major issues.

The cons of salvage title 

A salvage title car could save you thousands of dollars up front. But it could cost you even more money (and other headaches) over the long term. If you’re considering buying a salvage title, you should know about the potential consequences beforehand.

First, salvage titles are hard to insure. Many car insurance companies won’t sell you collision or comprehensive insurance if you have a salvage title. If you get into an accident, it’s hard to tell if the damage was caused by the crash or underlying issues that existed before the car was repaired. If you can get insurance, it’s going to be expensive.

Another thing to consider is that a salvage title stays with a car forever. Even if you rebuild the car and it runs perfectly, you still have to get the vehicle inspected at the DMV. And the DMV is very strict about approving salvage titles. If the car does get approved, the salvage title will be converted to a rebuilt title, but it will still be apparent that the car once had significant damage.

How to insure a salvage title vehicle

The process of insuring a salvage title vehicle is much different than insuring a new or used car. First, you’ll need to find an insurance company that will actually sell you insurance. After that, your car will undergo a thorough inspection. 

If your car passes inspection, and the insurance company will sell you a policy, be prepared to pay for it. Insurance on salvage title vehicles can be expensive because they are riskier to insure. However, you can still take advantage of discounts the company offers to lower your rate.

What insurance companies cover salvage titles?

Sometimes, the hardest part about insuring a salvage title is finding an insurance company that will give you coverage. Salvage title cars are much riskier to insure than a new or used car because there is known damage that could cause future issues.

Some private insurance companies, like Progressive and Geico, will insure a salvage title, but usually not without an inspection first. If you’re having trouble getting preferred coverage, your only option might be to get insurance through a non-standard insurance company, such as National General or Esurance.

Requirements for insuring a salvage title car

Insuring a salvage title vehicle comes with some unique requirements. Namely, your car will need to pass multiple tests and inspections before it’s deemed safe enough to insure. You will also need to provide a copy of the title, the car’s VIN number and its claim history. 

Coverage on a salvage title vehicle

Salvage title vehicles can benefit from physical damage coverage. Collision and comprehensive insurance will protect your vehicle from any further damages stemming from an accident, severe weather, flooding, a collision with an animal and so on. But carrying these coverages is only beneficial if the cost of the vehicle is more than the cost of insurance.

Physical damage insurance coverage requirements

Before you’re able to get physical damage coverage (collision and comprehensive), your car insurance company will most likely require that your car can pass a few tests. First, it will be inspected by a mechanic for under-the-hood damage. Then, an insurance agent will examine the outside of the car for damages. Lastly, you’ll also need to provide current photos of the vehicle from multiple angles.

However, there’s still no guarantee that an insurance company will offer physical damage coverage, even after taking all of these steps to prove the vehicle is driveable. When shopping for a provider that offers coverage for a salvage title, ask what coverages are available for this type of vehicle. 

The takeaway

  • A salvage title means a car has excessive damage and was deemed a total loss by the owner’s insurance company. 
  • Salvage titles are very inexpensive to buy, which makes them an enticing option for car shoppers.
  • Sometimes salvage titles are fixable, but it’s hard to get them insured, and they come with a list of other potential issues.

If you’re in the market for a new vehicle, you’re probably looking for a good rate. But don’t be tempted to settle for a car with a salvage title. You might be getting a killer deal, but there could be extensive damage under the hood that you can’t see. Even worse, you might not be able to get the car insured.

Elizabeth Rivelli

Elizabeth is an insurance writer for coverage.com, where she covers insurance providers and reviews policies to help consumers find comprehensive and affordable coverage for every area of their life. She has more than three years of writing experience for top online insurance and finance publications.

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