How to Get Car Insurance for a Salvage or Rebuilt Title

Does a Salvage Title Affect Car Insurance Rates?

Before you invest in a salvaged car, you may want to take the time to understand exactly what you’re getting yourself into. The following information can help.

What is a Salvage Title Vehicle?

A salvage title indicates that a vehicle has been previously damaged and declared a total loss by an insurance company. This usually happens when a car is damaged to the point that the cost of repairs exceeds the car’s value. The insurance company will therefore find it more cost-effective to issue the owner a payout for the value of the vehicle versus investing in costly repairs.

Since insurance companies want to recoup the loss of that insurance claim, the companies will sell the totaled car to an auto repair company to be rebuilt. The vehicle may then be sold again, but most state laws stipulate that the sellers have to sell the car as a “salvage title” rather than a clean title so that future buyers have all the facts and can make an informed decision when purchasing the vehicle.

If you see the words “salvage title,” you know that the car has experienced serious damage, such as:

  • A major collision
  • Fire or flood damage
  • Riot damage
  • Hail or weather damage
  • Vandalism

If you’re planning to do some of the repair work yourself, salvaged vehicles may help you save money. Otherwise, buying a salvage car may simply not be worth the headache. You may be better off buying a used or new car instead of dealing with any hassle related to a salvage vehicle.

Why Are Salvage Cars Hard to Value?

Salvage cars typically have no Kelley Blue Book value. When they do, they tend to be valued at 20-40% less than other used cars with similar mileage. Also noteworthy is the fact that most financing companies are reluctant to finance a salvage car. 

There are two main reasons for this. First, it’s impossible to know how a car’s prior damage might affect its future performance. Second, car buyers are reluctant to purchase a car with a history of significant damage. This means that salvage cars lack market value. 

You can use the vehicle identification number (VIN) to obtain a Carfax vehicle history report, which shows the history of the car, but this information doesn’t typically increase the car’s overall value.

How Do Car Insurance Companies View Salvage Vehicles?

Most insurance companies are reluctant to provide insurance coverage for a salvage vehicle, especially when you’re looking for collision coverage or comprehensive coverage.

It’s difficult to assign an accurate value to a salvage car. Insurance companies may also not trust the rebuild. For instance, untrustworthy mechanics may tamper with the odometer or find ways to conceal the age and condition of the car. This makes auto insurance companies wary of rebuilt vehicles.

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How can I tell if it’s a salvage vehicle?

“State laws require that the seller inform a buyer in writing” that the vehicle they want to purchase is salvaged, Suarez says. But in several cases, Mercury found the information was not clearly disclosed to buyers.

To make sure you’re not unknowingly purchasing a salvage vehicle, you check the car’s vehicle identification number (VIN) or title.

The federal government’s National Motor Vehicle Title Information System (NMVTIS) provides information on a vehicle’s condition or history. You can purchase those reports from a number of companies.

The National Insurance Crime Bureau (NICB) provides VINCheck, which can help you tell if a vehicle has been reported as lost but not recovered, or if it has been reported as a salvage vehicle.

CarFax and other private companies also offer information on a vehicle’s history.

How does a salvage or rebuilt title car affect your insurance?  

Obtaining insurance for a rebuilt salvage title car can be tricky. Some insurance providers may be hesitant to provide coverage for these vehicles, given the increased risk and uncertainty they elicit. 

First, they may have concerns about hidden defects that mechanics may have overlooked during the restoration process, particularly safety-related ones. These obscure issues could make the vehicle more dangerous to operate than it appears, increasing the risk of you filing a claim following a collision or other serious incident. 

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Are you currently scouring the market for a used vehicle to purchase? If so, you may have come across cars branded with a salvageorrebuilt title. These designations indicate the car has sustained considerable damage in a past incident, based on an assessment by the previous owner’s insurance company.  

Can you insure a salvage vehicle?

Have you ever wondered whether insurance companies would be willing to cover your salvage car?

You may not be able to get covered for a salvaged vehicle from your current car insurance company.

Many insurance companies will not insure salvage title cars; if your insurance company is one that doesn’t provide this insurance, then you will want to shop around for other alternatives.

One of the things to be aware of is that most auto insurance companies that do offer salvage title insurance will not offer much in the way of coverage.

If you are looking to insure a salvage title vehicle, there are a couple of things you should consider.

First of all, most will not provide more than liability coverage for the vehicle.

If you were hoping for a comprehensive plan, depending on what state you live in, you would probably be out of luck.

If you are concerned about theft, you may want to invest in a storage space for your salvage title vehicle.

Also, if your intention is to repair and fix up your salvage car, you need to understand, with some exceptions, that the value will always be considered at that 30 percent (or less) it was figured at when the vehicle was in the accident.

As you probably surmised, for every rule there is an exception.

Most insurance companies will make an exception for any classic car (or truck) that has been appraised by a professional and announced in a specific condition.

Once an expert verifies a vehicle, the insurance company will also send an agent (or appraiser) to look at the vehicle as well. You will be required to get special plates for the car declaring it a restored classic.

Find out if you will be able to get salvaged title insurance by contacting your car insurance company. They will know the best process for obtaining the title.

There are some insurance companies who will also consider a non-classic restored vehicle for additional appraisal.

However, regardless of the new appraisal, because the vehicle has been in an auto accident, it will never have the value of a vehicle of the same type that has never been in an accident.

Fortunately, the cost of insurance for a salvage title vehicle will be about the same price as it would for a regular vehicle.

However, just like any other type of car insurance, it is important that you shop around to get the best deal.

If you are driving a salvaged car, you should compare quotes to find the best rates.

With a free car insurance rate quote tool, you can compare the rates of several companies all in a single session.

You simply answer a few questions about your driving history, age, where you live, and a few other things, and we will get you instant quotes from several reputable car insurance companies.

Enter your zip code below to compare rates from multiple insurance companies today.

How Does Salvage Title Insurance Work?

Many insurance carriers refuse to provide coverage for a vehicle with a salvage history—especially where physical damage coverage is concerned. So obtaining insurance for a car with a rebuilt title can be difficult. Any rebuilt or restored salvage vehicle will be tarnished with the information that it’s been totaled in the past, and even a car that looks fine cosmetically could have defects in the computer and safety devices. 

“Insurance carriers often see salvage vehicles as unfavorable because they are unable to assign the correct risk to the vehicle,” said Josh Damico via an email interview with The Balance. Damico is vice president of insurance operations at Jerry, an automated compare-and-buy car insurance service app. “The value of the vehicle can vary, so it is not a risk most carriers are willing to take,” Damico said. 

Even Kelley Blue Book (KBB) notes that a salvaged or reconstructed title has a permanent negative impact on the car’s value—usually between 20% to 40%. But KBB advises consumers to privately appraise a salvaged vehicle to better determine its true value. 

Will I pay extra for salvage title insurance?

Yes, but that is partially because there is not as many companies offering this coverage. With less competition rates can be higher.

It also depends on the company you choose. “Some companies that are willing to insure rebuilt title cars are non-standard carriers – those that are willing to insure high-risk drivers, etc.

Companies that cater to high-risk drivers and are willing to insure rebuilt vehicles typically have much higher rates compared to companies that insure safe or standard risk drivers and vehicles – as in a car with a clean title and driver with clean driving record,” says Gusner.

Since non-standard companies take on more risk, their rates are generally a bit higher than other companies.

“However, a liability-only policy may not come with that hefty of a premium, so if someone is interested in insuring a car with a rebuilt title, it is worth comparison shopping.

“First, see if you can get the coverage you want, and then second, compare the rates for the rebuilt car to what it would cost to insure a vehicle with a clean title,” says Gusner.

Bear in mind that auto insurance policies are written based on the year, make and model of the vehicle, among other factors. The diminished value of the vehicle usually isn’t taken into account, Suarez says.

So if you buy a salvage 2012 Toyota Camry, you’ll pay the same amount for your car insurance as someone who has a 2012 Toyota Camry that hasn’t been damaged.

Also, some carriers charge you extra for insurance, even though your vehicle is worth less than comparable cars.

Mercury is preparing to implement a 20% surcharge on such vehicles, Suarez says. “It came to our attention because we have seen a trend in our competitors of charging more for these vehicles.”

Can you insure a car with a rebuilt title?

If you’re looking for insurance for a salvage title, you’re in for an uphill battle. In many cases, salvage titles are not safe to drive—so you’ll be hard-pressed to get insurers to take a second look.Rebuilt titles, on the other hand, have been certified as safe to drive. It is possible to get insurance for them, though there may be certain restrictions.Some insurance companies only offer liability insurance for rebuilt titles. Since it can be hard to assess pre-existing damage on these cars, you might not be able to get collision insurance or comprehensive coverage.If you find yourself in a difficult insurance situation, Jerry can help make it easy!All you need to do is fill out a handful of questions (that take roughly 45 seconds!) and Jerry does the rest of the work. In under a minute, you’ll have competitive quotes from top insurance providers that meet your coverage needs.Jerry takes care of the paperwork and phone calls, and even cancels your old policy for you! And when your policy is up for renewal, Jerry keeps the savings coming with more competitive quotes—so you can be sure you’re always getting the best deal, no matter how difficult your insurance situation seems.RECOMMENDED
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How much should I pay for a salvage title car?

After a vehicle is totaled out by the insurer, it can be re-built and re-titled as a salvage car. But the industry will then typically deduct about 20 to 40 percent of the Kelley Blue Book value from what it would be with a clean title

Frequently asked questions

How does a car get a rebuilt title?

Generally speaking, vehicles must be inspected and pass a series of tests to prove that they’re safe and roadworthy before they get a rebuilt title. The guidelines for getting a rebuilt title vary by state. In some states, like Florida, a vehicle gets a salvage title when the insurance company declares it a total loss, and that title indicates whether the vehicle is rebuildable or not. Other states only ‘brand’ the vehicle title when the damage estimate reaches a certain percentage of the vehicle value (in New York, for example, it’s 75%).In Nevada, a vehicle will receive a rebuilt title if it has undergone certain major repairs, regardless of whether it had a salvage title or not.If you have questions about what is necessary for a car to get a rebuilt title, it’s best to check with your state DMV.

How can you tell if a car has been rebuilt properly?

One of the key problems with buying a car with a rebuilt title is that you never know how well the repairs were done.The best way to ensure the car has been rebuilt properly is to have a reputable mechanic conduct a pre-purchase inspection. They can assess the damage and the standard to which it was repaired.It should cost you around $100–$200 to get an inspection on the vehicle—and it’s money well spent for your safety and peace of mind.

What is the difference between a salvage title and a rebuilt title?

Essentially, a salvage title means the vehicle was deemed a write-off by an insurance company–the cost to repair the vehicle was more than it was worth.A rebuilt title on a car means the vehicle used to be a salvage title vehicle, but it has since been fixed and tested for safety.

Can you get insurance with a rebuilt title?

Yes, you can get insurance with a rebuilt title, but you'll have to look around. Not every carrier will be willing to give you the coverage you need.

Does it cost more to insure a rebuilt title car?

Due to the vehicle’s history, a vehicle that’s been rebuilt may cost more to insure. Since a rebuilt vehicle may have issues that weren’t fixed during the restoration process, insurance companies may view them as more likely to be involved in an accident, which can lead to a higher insurance rate.

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