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Guide: Salvage Title Car Insurance

Bridget Sielicki

You’ve found the perfect fixer-upper at a car auction and you know you can bring it back to life with the right repairs. The only problem is, it has a salvage title. Can you get insurance on this otherwise flawless find? That answer depends; salvage title car insurance is available, but you may have to jump through a few hoops to get it, and you should be prepared to pay a more money for less coverage than you would get on a standard non-salvage title vehicle. Shopping around for a car insurance quote, doing your homework and being prepared are the right ways to secure insurance for your ride.

What is a Salvage Title Car?

When a car has a salvage title, it means that the vehicle was in an accident or suffered enough damage otherwise (due to something such as a weather event or theft) that its prior insurance company totaled it. If a car is totaled, that it doesn’t mean it’s unrepairable; it just means that the cost of repairs is higher than the total value of the car, and therefore the insurance company doesn’t want to pay for those repairs.

After an insurance company declares a car a total loss, it takes possession of the car and sells it at auction, often to a salvage yard. Once a car is totaled, it receives a salvage title or salvage certificate. The salvage designation varies from state to state, which is part of the reason a salvage title is difficult to insure; repairs that deem a salvage designation in one state might not get the same rating in another state. One thing is consistent though: the salvage designation isn’t removed, even if the car is totally rebuilt and restored. Some states offer a rebuilt salvage title, but even this indicates that the vehicle at one time was totaled. Because the title stays with the car throughout its life, insurers have a simple way to know if the vehicle has ever been salvaged.

Can You Insure It?

If you want insurance on a salvage title car, be prepared to do some shopping. Few insurance companies are willing to provide insurance for a salvage title vehicle, and those that do are likely only to offer liability insurance rather than full comprehensive and collision coverage. One of the reasons this happens is because it’s difficult to determine the value of a salvage car, even if it’s rebuilt. A liability insurance policy protects you if you’re responsible for an accident, and many insurers are willing to provide this coverage because the type of car you’re driving doesn’t normally matter if you’re at fault in an accident. Collision and comprehensive coverage are much more difficult to find for salvage title vehicles. Insurance companies have a hard time placing a value on these rebuilt cars, and few insurers are willing to pay up if the vehicle is in an accident or needs repairs.

Difficulty obtaining comprehensive and collision coverage can translate into a bigger problem if you want to finance the car. Most lenders don’t finance vehicles without this full insurance coverage because, until the loan is paid off, the lender owns the vehicle and it wants to fully protect the investment. If you have your heart set on that fixer-upper, be prepared to pay cash up front.

Rebuilt Salvage Titles

If you want insurance on your salvage title car, some states require you to get a rebuilt salvage title. The stipulations for getting a rebuilt salvage title vary from state to state. For example, in Ohio, you must have your car inspected at an inspection facility run by the Ohio State Highway Patrol. When you go to this inspection, you must bring all receipts for parts and repairs done to the vehicle. If your vehicle passes the inspection, you can get a rebuilt salvage title, which lets you legally drive the car on highways.

While states have their own rebuilt salvage title rules, insurance companies also vary in the coverage they might provide. Having a rebuilt salvage title might help you get coverage from some insurance companies, but others might still refuse to cover the car. If you try to insure the car with the same company that totaled the car, it isn’t likely you’ll be successful, even if you just want liability insurance. Some insurance companies might be willing to provide coverage if the car was totaled by another insurance company. Shopping around with a variety of insurance providers is key for finding coverage.

Summary

If you want insurance for a salvage title vehicle, be up front with your insurance company. Tell the insurer that the car has a salvage title, and see what kind of coverage you might be able to get. It may be to your advantage to provide documentation that the car has been repaired and is safe to drive. Be prepared to receive only liability insurance, and if you’re able to get collision and comprehensive coverage, make sure you know how much the insurance company pays in case of a claim. Overall, be prepared to pay a bit more for your premiums and accept less coverage on your salvage title vehicle.

 

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Published September 6, 2016
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