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Published: February 1, 2022Last updated: July 13, 2022

Can You Insure a Salvage Vehicle?

Salvage vehicles need to be rebuilt before they can be insured.

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A salvage vehicle is a car or truck that has been deemed a total loss from a previous accident. It is possible to buy a low-cost salvage vehicle and fix it so that you can register and drive it again. In order to insure a salvage vehicle, you must first repair it sufficiently to meet inspection guidelines. Once it meets these standards, the repaired vehicle is called a “rebuilt vehicle,” and rebuilt salvage cars can be insured.

Can You Insure a Salvage Vehicle?

You cannot insure a salvage vehicle until it is repaired. By definition, a salvage vehicle has so much damage and repair needs that state agencies don’t consider it drivable on public roads. If you buy a salvage vehicle without insurance but have a licensed repair shop fix it so that it can pass the required safety inspection, you can insure it.1

What Is a Salvage Title?

A salvage title is a designation given to a registered car deemed a total loss in accidents. A salvage title says that a car has such extensive damages that an insurance company considers it a total loss. The insurance company gives the insured car owner a check for the car’s fair market value instead of repairing it. When the payout happens, the insurance company transfers the car title and notates it as a salvage title.2

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Be wary of used cars; run a Carfax report to see if the title is clear. Some people or companies buy salvage titles, fix them, and sell them. As the buyer, you should know if a car had a salvage title on it.3

Why Insurance Companies Declare Cars Total Losses

Insurance companies declare cars total losses to remain profitable. Whenever there is a loss, such as damage to your vehicle in an accident, the insurance company evaluates how much it will cost to repair the vehicle. An insurance company might declare a car a total loss if the repairs cost close to or more than the vehicle’s current value. In other words, insurance companies determine the most profitable way to proceed from each loss, whether that is an accident, vandalism, or theft.

Is It Bad to Buy a Salvage-Title Car?

Cars with salvage titles are often used for parts, but some people buy these vehicles to repair. Because insurance companies consider them total losses, they are cheap to buy. However, even after the cars are fixed, the titles will show that they were once totaled, making them difficult to insure and resell.

Is It Worth It to Insure a Salvage Vehicle?

If you plan to drive a salvage vehicle on the road, you need insurance on it. You should investigate all purchase, repair, and insurance costs before buying salvage vehicles to see if they are worth it.

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Insure any car you plan to drive on the road. Insurance protects you from the liability of at-fault accidents and claims.

Is Salvage-Title Insurance More Expensive?

It can be more expensive to insure a car with a salvage title than a clear one that was never deemed a total loss. In some cases, insurance carriers will add surcharges of up to 20 percent more for the policy’s premium. Some carriers don’t provide coverage for salvage vehicles at all, so you may need to shop around for cheap auto insurance.

Available Coverages for Salvage Vehicles

When buying car insurance, you may find that the available coverage for a salvage vehicle is limited. After rebuilding the car, you can get liability coverage. However, insurers might only offer comprehensive or collision coverage that covers 80 percent of the vehicle. You should also be able to get medical payments coverage, personal injury protection, emergency roadside service, and rental car coverage with your insurance.

Is Rebuilt and Salvage Title the Same?

A vehicle issued a rebuilt title is different from a vehicle issued a salvage title. A salvage title represents a car that is a total loss before any repairs. A rebuilt title means that a licensed mechanic made repairs to a vehicle so that it could pass a comprehensive inspection. Salvage cars are not road-worthy, while rebuilt titles are.

How Much Does a Salvage Title Devalue a Car?

A car with a salvage title may be worth a fraction of the market value for another vehicle of the same make and model. Expect the value to be only 20 to 40 percent of the Kelley Blue Book value. The low cost is what makes salvage cars attractive to people with small car budgets; they can get salvage-title cars for a lot less than clear-title counterparts.4

Is Getting Comp and Collision Worth It on a Salvage Vehicle?

It’s up to each car owner to determine whether it is worth it to get comprehensive coverage and collision coverage on rebuilt vehicles (learn more about collision and comprehensive coverage).

Car owners must realize that insurance companies consider a car a lower value if it has been severely damaged in an accident. Remember that you can only insure a salvage or rebuilt-title car for up to 80 percent of the fair market value of similar models. In other words, you might not get a lot of coverage in a claim.

How to Get Insurance With a Salvage Vehicle

Follow these steps to get insurance with a salvage title:

  1. Get the car rebuilt to pass inspection.
  2. Re-register the car with the rebuilt-title designation.
  3. Shop around and compare insurance quotes to find cheap car insurance companies that will serve your needs.

Major insurance companies such as State Farm, Mercury, and Farmers will insure rebuilt salvage-title vehicles.

Recap

While getting a salvage-title car can save you money on a purchase, it comes with its own set of problems and costs. You must repair the vehicle to meet your state’s driving standards.

Also, you must find insurance for the vehicle, which may be more expensive with lesser coverage. Minimum auto insurance coverage for personal motor vehicles varies by state. To learn more, read our auto insurance FAQs.

Citations

  1. Can you get insurance on a salvage title car? Progressive. (2022).
    https://www.progressive.com/answers/insurance-salvage-title-car/

  2. What Is a Salvage Title Car and Should I Buy One? Experian. (2018, March 21).
    https://www.experian.com/blogs/ask-experian/what-is-a-salvage-title-car-and-should-i-buy-one/

  3. CARFAX Home Page. CARFAX. (2022).
    https://www.carfax.com/

  4. Frequently Asked Questions – My Car’s Value. Kelley Blue Book. (2022).
    https://www.kbb.com/faq/values/