You got a great deal on a used car because it has a salvage title, and now it’s time to find insurance to cover your vehicle on the road. A salvage title is different from a regularly titled vehicle. You’ll want to disclose that your vehicle has a salvage title to your automobile insurance provider to get the best coverage possible. Purchasing a salvage vehicle shows you’re money-savvy, so finding cheap car insurance for salvage cars should be next on your list.
What Is a Salvage Title?
When a vehicle is involved in a car accident, the insurance company will determine the vehicle’s actual cash value when looking at the cost of repairs. Typically, a salvage car meets one of the following criteria:
- The damage is so severe that it isn’t worth fixing
- The damage is more than 60% of the vehicle’s actual cash value (ACV)
- The vehicle was stolen and written off before being recovered
When the cost of repairs is too much to warrant fixing, a vehicle may be branded “salvage” and sold off for parts. However, sometimes these vehicles can be refurbished enough to drive on the road again. In that case, the vehicle is referred to as having been rebuilt. A vehicle that has been deemed salvaged by an insurance company loses a lot of its residual value, making it a lower-cost investment than a vehicle with a clean title.
A properly restored vehicle can perform much like a vehicle with a regular title, making salvage vehicles a great way to get the performance you need at a price you can afford.
What Is the Difference Between a Salvage and Rebuilt Title?
Once a car insurance company has labeled a vehicle as salvage due to costly repairs, the owner or a new buyer can decide to repair it. If the vehicle is restored to the point that it can pass inspections, the title can be changed to a rebuilt title in many states. Not all salvage vehicles can be repaired, and if yours is deemed unrepairable, you may have no choice but to sell it off for parts. A quick way to determine the type of title your vehicle has is by its color:
- Green: clean title
- Blue: salvage title
- Orange: rebuilt title
Can You Insure a Salvage Vehicle?
You will likely not be able to get automobile insurance to cover a vehicle with a salvage title because it is not considered roadworthy. However, if the vehicle has been rebuilt, you will be able to insure it once you have it branded as a rebuilt salvage vehicle. It’s important to note that many companies may still refuse to provide insurance coverage to your rebuilt vehicle, while others may only allow you to carry liability coverage.
Although it’s possible to get comprehensive and collision coverage, not all auto insurance companies will be willing to offer these coverages on a vehicle considered subpar from the start. You may find that the annual premium and payout amount available for these coverages isn’t worth the added expense.
How Do You Get Salvage or Rebuilt Title Insurance?
Check with your automobile insurance company to determine whether or not you can apply for salvage or rebuilt title insurance through them. If not, you may want to shop around with other companies to find one that will allow you to insure your salvage or rebuilt vehicle. The process for insuring a salvage or rebuilt vehicle can be complicated. Follow these steps to help make the process a little easier and quicker:
Change the Status of Your Title From Salvage to Rebuilt
Insurance companies will not offer coverage for a vehicle with a true salvage title; therefore, it’s important to change the status of your title from salvage to rebuilt. This change will enable you to apply for insurance coverage on your vehicle. If the insurance company believes the damage to be irreparable, they may not grant this change, and you’ll need to scrap out the vehicle instead.
Get a Certified Mechanic To Sign Off
Having a certified mechanic perform a secondary inspection of your vehicle to ensure that any issues have been addressed in the rebuild is crucial. Most insurance companies will require a certified mechanic statement addressing the fact that all issues have been remedied and stating that the salvaged vehicle is once again roadworthy.
Determine Your Insurance Coverage Options
You may need to spend some time researching which automobile insurance companies offer insurance for salvage or rebuilt vehicles, as not all companies provide this service. You’ll also want to determine the types of coverage available for your vehicle. Because it can be difficult to ascertain damages caused prior to the vehicle being labeled as salvage versus those from a new incident, many companies may only offer you liability coverage. If you’re able to get full coverage, note that your insurance provider may charge you up to 20% more in insurance premiums based on the title status of your vehicle.
As with any time you’re researching automobile insurance, you should compare quotes. Insurance coverage is based on many factors, including your age, driving history, accident history, location, vehicle type, and in this case, vehicle title status. Many of these factors you can’t control, but you can control one factor, and that’s the company you select. The difference in annual premiums for the same insurance on the same driver in the same vehicle can vary by hundreds, if not thousands, of dollars among auto insurance providers. It’s up to you to eliminate this factor by comparing quotes from several companies.
Where Can You Get Cheap Car Insurance for Salvage Cars?
Once you’ve purchased a salvage car and have worked to get the title status changed to rebuilt so that you can insure the vehicle, it’s time to look for cheap car insurance for salvage cars. According to Car and Driver, the following companies offer insurance for vehicles with salvage/rebuilt titles:
- General Insurance
- 21st Century
- The Hartford
- National General
When researching possible insurance providers for cheap car insurance for salvage cars, you may want to include photographs of your vehicle before rebuild and after, along with the mechanic’s statement and original repair estimate.
Insuring a salvage vehicle isn’t impossible, but it does come with a little extra leg work. Make sure you’re ready to take on the steps necessary to insure such a vehicle prior to purchasing one to save yourself some headache. Hopefully, with a little research, you can save money on both your vehicle and insurance purchases.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.