How to Get Insurance on a Car With a Salvage or Rebuilt Title

What Is Salvage Title Car?

When the cost of repairs on a car exceeds the value of the vehicle, it is considered a salvage vehicle. There are many situations in which a salvage vehicle may be damaged to this amount. This includes vehicles that been damaged by hail or floods, stolen and recovered cars, and cars that have been damaged in an automobile accident.

If a car has a repair amount that is anywhere between 50% and 90% of its total value, the car might be considered a total loss in the state you are living in. Each state has different guidelines to help determine when a vehicle can be considered a total loss.

Insurance companies may choose to consider a car totaled more easily if it is an older model vehicle. The cost of labor can be more expensive in older cars, and of the value of the car can be quite a bit less. This determination is often made for business reasons, so the insurance company can pay less in the long run.

If someone is selling a salvage car, state law requires that the person informs the buyer of the vehicle in writing that the vehicle is salvaged. It is best when this information is explicitly given, but it does not always happen this way. Checking the vehicle identification number, or VIN, of the vehicle, can help make sure you are not purchasing a salvage vehicle.

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  • Get an independent appraisal done so you can judge whether the value established by an insurance company is fair.
  • Consider the potential consequences of only having third-party liability coverage.  

Salvage and rebuilt title cars typically have poor resale value, so if you’re keen on purchasing one, expect to drive it until it completely falls apart.  

For this reason, it’s also wise to shop around and compare car insurance rates from multiple insurance providers — that way, you won’t get saddled with a hefty premium for years to come. 

LowestRates.ca is a free and independent rate comparison website that allows Canadians to compare rates from 75+ providers for various financial products, such as auto and home insurance, mortgages, and credit cards.

How To Get Car Insurance For Salvage Title?

The first step to getting car insurance for salvage title vehicles is to do research on the vehicle you are looking to purchase. By utilizing the vehicle identification numbers, as well as the resources listed above, buyers can make an educated decision on their purchase.

A number of automobile insurance companies do not provide insurance for salvaged vehicles at all. Travelers is one example of the many. In fact, some estimates state that up to 33% of car insurance companies will not write policies for salvaged vehicles.

If you are specifically seeking out a salvage title car to save money, it may be a good plan to look for cars that are being sold by insurers. The insurer is aware of the specific situation the car was in when it was declared a total loss. It is also likely to have more documentation, such as photographs and written reports of the damage, that other people do not have. Asking the insurance company that you are looking to purchase from if they will cover the car can be a great way to get insurance on your vehicle.

Certain types of accidents are easier to get insurance for when it comes to salvaged vehicles. If the car was totaled due to natural disasters, getting coverage may become a lot more difficult. After natural disasters, some car dealers look to clean up the car so that it seems nice but do not invest the money in repairing what is needed.

One trade-off for getting a salvage title car is that some insurance providers will not offer full coverage on the vehicle. Instead, they will only provide liability coverage, coverage that is designed to protect you if you are at fault in an accident and injure someone else or damage their property. Coverage such as comprehensive insurance will be harder to get because the coverage will extend to things that are not accidents. Collision coverage can also be more challenging to obtain.

Car Insurance Companies That Take Salvage Titles: The Bottom Line

One of the most significant disadvantages of salvage titles is out-of-pocket repairs.

If getting a rebuilt title is better for you, accept a salvage title as a settlement. However, you’ll void a manufacturer’s warranty when you get a rebuilt title.

Now that you know more about car insurance companies that don’t take salvage titles, use our free comparison tool to compare multiple insurance companies in your area.

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Can I drive a car with a salvage title?

A car with a salvage title cannot be driven on the road legally even if it still runs.

However, depending on the severity of the damage, some of these cars can be repaired and rebuilt.

Many states will require that you have the vehicle inspected to make sure that it is roadworthy. If the car has been salvaged, or rebuilt, it then receives a “branded” or rebuilt title.

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 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.

Can You Insure a Car With a Salvage Title?

Now that you know what a salvage title is, the next question is: Can you insure it? The short answer is no. You can’t insure a salvage title vehicle, but you can insure a rebuilt vehicle once it’s passed a safety inspection and deemed roadworthy again. Even then, you may have a hard time finding car insurance for it.

Some insurers will sell you liability insurance to protect you if you get into an accident and damage someone else’s car. But they may not offer collision or comprehensive insurance on the rebuilt vehicle. After all, it’s already been written off as a total loss once, so they’re not going to pay for you to rebuild it again!

This may not be a problem if you’re keeping a rebuilt car for sentimental value and plan to leave it parked in the garage most of the time. But it can be a problem if you plan to use it as your primary car and drive it regularly.

If you find an insurance company willing to offer you collision coverage, they may limit the amount that they’ll pay out if you file a claim.

What is salvage car insurance?

Salvage car insurance is insurance for vehicles that were involved in an accident, vandalism, or a flood

  • Some insurance companies will specifically name their coverage salvage car insurance
  • Salvage car insurance is a bit different from other types of car insurance options

When a person has an auto accident that totals their vehicle, in most cases, they allow the towing company to take it away and they file their claim with the insurance company, assuming that they are going to dispose of the vehicle.

What really happens, however, is that the towing company gets to keep the vehicle and all of its contents if the owner doesn’t come and make a claim on it.

If they fix up the car and sell it, or they sell the damaged vehicle to a third party who fixes it up and sells it, this is considered a salvage vehicle.

Get your salvage car insurance quotes online by entering your zip code.

Why Would a Vehicle Have a Salvage Title?

There are several reasons why a vehicle might have a salvage title, some of which are more of a problem than others. One possibility is that it was in an accident and suffered major damage under the hood. In this case, it may not be roadworthy, and you’ll need to make substantial repairs before you can drive it.

In other cases, the car wasn’t in an accident but was damaged by extreme weather conditions. Flood damage and hail damage are both common. If the damage is minor, you may be able to repair it more easily, but it’s a good idea to get a second opinion from a body shop to make sure there’s only cosmetic damage.

The third reason a vehicle might have a salvage title is because it was vandalized or stolen. Don’t worry — you won’t get in trouble for purchasing a stolen vehicle. Typically, the car was recovered after the insurance company had already paid it off, or it was stripped of its parts and considered a total loss by the insurer.

Putting a Salvage Vehicle Back On the Road

If you want to repair a salvage title vehicle to sell it or return to the roads, you may be able to request an upgrade to the salvage title. After being repaired and passing a salvage and/or safety inspection, the title could convert to a title status such as: 

  • Operable salvage title
  • Rebuilt or rebuilt salvage 
  • Previously salvaged 
  • Restored salvage

Once a car qualifies as a “rebuilt” vehicle or another status that indicates it’s been repaired, inspected, and met state requirements for road operation, you may be able to re-title and insure it. However, it’s likely that a decal or other notation of its salvage status will be permanently affixed to the vehicle’s record. 

Some salvaged cars are auctioned off at a salvage auction or may be deemed “junk vehicles” and used for parts.

How do car titles work?

There are 3 different vehicle titles. Before you purchase or insure your car, you need to know which title it has, including:

  • Clean title
  • Salvage title
  • Rebuilt title

How expensive is salvage car insurance?

For the most part, salvage car insurance is about the same price as traditional insurance. The real difference is the value placed on your vehicle.

What are salvage and rebuilt titles?

Let’s say your car has been in a major accident or suffered serious damage due to theft, vandalism or natural disaster.

If the cost of the damage is close to or in excess of the fair market value of your car, the insurance company may declare the car a total loss. Your state’s transportation agency may give the vehicle a salvage title — though laws regarding when a salvage title is required may vary by state. In many states, salvage title vehicles can’t be driven on public roads.

If significant repairs have been done on a salvage car, it may be issued what some states call a rebuilt title. A rebuilt title indicates that a salvage title car has gotten the repairs necessary to make it safe for driving. To qualify for a rebuilt title, a salvage vehicle may need to pass state-mandated safety and anti-theft inspections. Required inspections may vary from state to state.

What Does Salvage Title Insurance Cover?

Common insurance coverage includes: 

  • Liability: Pays for damage you cause to someone else or their car or property
  • Uninsured/underinsured motorist: Pays for your injuries caused by an uninsured or underinsured driver
  • Medical payments/personal Injury protection: Pays your accident-related medical bills, no matter who is at fault

Most states require bodily injury and property damage liability, uninsured/underinsured motorist, and personal injury protection.

According to Damico, a driver could get liability insurance for a vehicle with a salvage title with certain carriers, but “most carriers would not be able to add comprehensive and collision.” He added that these coverages may not be necessary due to the vehicle’s decreased value. 

“Ultimately, what is and isn’t covered depends on the carrier, and some will require an inspection of the vehicle to show it has been repaired before offering full coverage,” Damico said. 

How Does a Salvage Title Work?

When a car has been declared a total loss, either its owner or the insurance company can apply for a salvage title. Which party does so depends on who plans to retain possession of the vehicle.

If the owner chooses to keep a totaled vehicle or didn't have insurance coverage, they would be responsible for applying for a salvage title. If the insurance company repossesses a damaged vehicle after declaring it a loss, the insurer would apply for the salvage title.

Salvage titles can be obtained through the state department of motor vehicles. Though the process varies from state to state, it typically involves filling out an application, paying any required fees, and submitting the car to a salvage vehicle examination. The examination will assess the extent of the damages and the vehicle's overall condition.

A salvage inspection is not the same as a regular safety inspection or emissions inspection. It may vary by state, but in the state of Massachusetts, the examiner will do all of the following during an inspection::

  • Verify that the vehicle identification number (VIN) of the car matches the number shown on the application.
  • Check the odometer to make sure the mileage matches the application.
  • Compare the vehicle's condition to what's stated on the application.
  • Verify that the vehicle's parts haven't been removed, defaced, destroyed, or otherwise tampered with prior to the inspection, beyond the damage that has been reported.

If you go in for a salvage inspection, you may need to bring certain documents with you, including your application for the salvage title, a receipt showing that you paid the appropriate fee, a copy of your insurance company's damage or appraisal report, and a bill of sale for any repair costs or parts you purchased.

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. 

The Difference Between a Non-Repairable and Salvage Title

There are situations when a car has damage that is so severe that it can never be driven again even if it was repaired. A car like this is given a non-repairable title rather than a salvage title. The owner of this kind of vehicle may not restore the title. A car with a non-repairable title can only be used for its parts.

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