Salvage title cars have sustained enough damage that the cost to repair them exceeds their value, so they’re “totaled.” A salvage title car that is repaired and roadworthy is one with a rebuilt title.
Some car insurance companies will charge you a higher premium if you buy a salvage title vehicle that has been repaired and carries a rebuilt title, and is now considered roadworthy, says David Suarez, former business development manager at Mercury Insurance.
But if the price of that salvage Mercedes or Honda seems irresistible or you just can’t let go of your favorite ride, here’s what you should know about insuring salvage cars.
What is a salvage title?
Insurance companies typically will declare a vehicle to be salvaged when the cost of the repairs exceeds the car’s value. The vehicle could have been totaled in a wreck, damaged by hail or floods or stolen and recovered months later.
Depending on your state, a car is usually considered a total loss if the repairs cost between 50% and 90% of the vehicle’s value.
If an older-model vehicle has been in an accident, it’s likely to be totaled out by the insurance company, rather than repaired, simply because of the cost of the labor involved in making the repairs.
“Companies do it for economic reasons,” Suarez says.
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 you to have the vehicle inspected to ensure it is roadworthy. If the car has been salvaged or rebuilt, it receives a “branded” or rebuilt title.
What’s the difference between a salvage title and rebuilt title?
Cars with salvage titles have been declared a total loss and can’t be driven legally. But once a salvage car has been repaired and passes an inspection from a state-approved salvage inspection operator, it can qualify for a rebuilt title. A vehicle with a rebuilt title can be registered, driven and sold.
However, it is common for people to mistakenly refer to rebuilt cars as salvaged title cars, even though they are two distinct. Since many people use these terms interchangeably, when discussing insurance for a salvaged car, we’re working under the presumption that it has been fixed and rebuilt.
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 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 National Motor Vehicle Title Information System (NMVTIS) provides information on a vehicle’s condition or history. You can purchase those reports from several 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.
What to look for when buying a vehicle with a rebuilt title
If you’re considering buying a vehicle with a rebuilt title, here are some critical steps to take to ensure you don’t buy a car that winds up not being a good deal:
- Research the history of the vehicle. You can do this through VINCheck, which is free, or pay to get a vehicle history report from Carfax, AutoCheck or the National Motor Vehicle Title Information System.
- Be wary of frame damage. Repairing frame damage is costly and requires significant work, and if not done right by a professional mechanic, may result in other problems.
- Inspect for for flood damage. Most experts recommend not buying a rebuilt title car that has had flood damage.
Try to find where the car repairs were done and research the reputation of the mechanics that did the work. If possible, review the seller’s repair records and receipts to know how much work was required.
Even if everything checks out, you should always have an inspection done bya trusted mechanic before offering to buy the car.
How to get a salvage title cleared
Requirements vary as states have different names, descriptions and qualifications for a salvaged car to be cleared and made roadworthy again.
Generally, we refer to this as a rebuilt title, but the language by your state and insurer may differ, such as “reconstructed.” So, while requirements vary, the insurance company will typically want a mechanic’s statement that the car is roadworthy.
Can I get insurance for a salvage title car?
Yes, you can. But be aware that not every car insurance company will insure salvaged vehicles. For instance, Travelers and Direct General are two companies that do not write policies for salvage cars.
Suarez estimates 20% to 30% of auto insurance companies won’t write these policies. But, he says if you’re trying to insure a salvage vehicle following a natural disaster, it might be harder to get any coverage: “Carriers tighten up on their desire to write salvage vehicle (policies).”
He says that car insurance companies are concerned after such events because unscrupulous car dealers may clean up the car so it looks presentable but not repair the damage.
How does a salvage or rebuilt title affect the value of a car?
A salvaged or rebuilt title car will be worth 20% to 40% less than a clean title car, according to Kelley Blue Book. The value of vehicles with rebuilt titles also depends on the amount of damage, the make and model, and the auto market in your area, so you should always have a private appraiser determine the market value.
Learn more about vehicles with rebuilt titles vs. clean titles
What documentation do I need to get insurance for a salvage car?
To obtain auto insurance for these vehicles, you’ll need a copy of your title, registration, and VIN. Some insurance companies also may require an appraisal, inspection or a mechanic’s report.
Can you get full coverage on a vehicle with a rebuilt title?
Companies that write car insurance policies for vehicles with rebuilt titles tend to offer liability insurance only. While it is difficult to find an insurance carrier that will provide the owner the option of adding on comprehensive and collision, it’s not impossible.
Insurers may not be willing to provide comprehensive coverage, which protects you if damage to your car isn’t due to an accident. It would cover theft, vandalism or damage from a natural disaster. You also may be unable to obtain collision coverage, which covers your vehicle if it’s damaged in an accident.
Will I pay extra for salvage title insurance?
Yes, but that is partially because not as many companies offer this coverage. With less competition, rates can be higher.
It also depends on the company you choose. Companies that cater to high-risk drivers and are willing to insure rebuilt vehicles typically have much higher rates than companies that insure safe or standard-risk drivers and vehicles – as in a car with a clean title and driver with clean driving record.
Since non-standard companies take on more risk, their rates are generally higher than others.
Remember, auto insurance policies are written based on the year, make and model of the vehicle, among other factors. The car’s diminished value usually isn’t considered, Suarez says.
So, if you buy a salvage 2018 Toyota Camry, you’ll pay the same amount for your car insurance as someone with a 2018 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.
— Michelle Megna contributed to this story.