Along with all the regular complexities of purchasing and ensuring a used vehicle, there's now a growing debate about the reality of buying a salvage car and getting it on the road with salvage title insurance. This sub-topic around the specific buying option has created some controversy, and there are a lot of opinions out there about the best practices for dealing with a vehicle that has been branded with a salvage title.
What Is a Salvage Title?
A used vehicle with a "salvage title" or "rebuilt title" has been previously damaged as a result of a collision, fire damage, flooding, or some other major calamity. Some insurers and other parties set standards for damage at a percentage of the car's value. The requirements for salvage titles differ by state, but generally, vehicles branded as rebuilt have to be retitled with a salvage title that marks the vehicle as being previously refurbished.
It's difficult to figure out how to ensure and drive a car with a salvage title because of different state standards. Also, because it's such an umbrella term, it's often hard for buyers and others to figure out exactly why the salvage title applies, and whether a car has been wrecked, stolen, or any combination of the above.
State Rules on Salvage Cars for Sale
As mentioned, the specific standards for getting a salvage title on a car vary from state to state. For instance, in Michigan, the birthplace of some major American automakers, the state police have to sign off on salvage title vehicles, as specified on the state's website.
Many owners of salvage title cars report that auto insurers do not want to cover their vehicles at all. A lot of this wariness comes from the fact that it's difficult for the insurer to value the salvage title car. Big Blue book companies like Kelley don't provide specific values for salvage title vehicles. In general, the refurbished nature of a salvage title car often makes its overall value of complete mystery. For this reason, it can be hard to secure auto insurance coverage.
Premiums vs. Claim Payments
Another problem with ensuring salvage title cars is that the driver might be able to get normal premium rates (rates that would be comparable to a vehicle without a salvage title), but he or she may encounter a problem later on in the case of a claim. The whole point of paying auto insurance premiums is to be able to recoup the value of a vehicle in the case of an accident. However, if a driver did not communicate properly with the insurer prior to a claim, he or she may find that the claim payment is so low that it's almost insignificant. That's because the insurer calculated premiums according to Blue Book value, but calculated the claim at a salvage title value, where the insurer saw the salvage title car to be nearly worthless because of its prior damage.
Keeping 'em Honest
The best way to prevent misunderstandings in claim situations is for a driver to be upfront with their insurer in the first place. If you're going to acquire insurance on a salvage title vehicle, make sure that the insurer has agreed in writing to a specific value for that vehicle. If they're not going to agree to pay its value on a claim, it may be possible to get dramatically reduced premium prices that correspond to their theoretical claim payment. It's all about talking to insurance representatives up front, before the deal is inked.
Frequently Asked Questions about Salvage Car Insurance
If a salvage vehicle is roadworthy, it's important to determine if insurance companies will provide insurance coverage and the cost of premiums offered. Before buying a salvage vehicle, it's advisable to bear in mind commonly asked questions regarding salvage car insurance as it helps buyers select a good car.
Can I Insure a Salvage Car?
Most insurance companies offer limited insurance coverage on salvage cars. The actual worth of a salvage car is much lower than a car with a clear title. Due to this, most insurance companies offer liability insurance and don't provide coverage towards damages. Salvaged vehicles generally have safety issues. Thus, insurers fail to offer comprehensive or collision coverage. Since each state uses different titles for salvage cars, the insurance coverage varies according to the salvage title listed.
What Does Salvage Title Insurance Cover?
Many insurance companies won't offer you collision insurance on your salvaged car because a claim has already been made deeming the vehicle unfit for the road. With salvage insurance you will want to protect yourself from lawsuits that could arise from an accident. Although you won't want to repair the car after an accident, make sure you have sufficient insurance to cover damages incurred by another party.
Do I Get Full Coverage for a Salvage Vehicle?
Most insurers offer few benefits on salvage vehicles since they are damaged cars that have been repaired. Some insurance companies offer full coverage for a salvage title vehicle. However, the insurers pay low amounts towards any claim filed in the future. In addition, the premium paid may increase depending on the damage sustained by the vehicle.
What Are the Prerequisites to Get a Salvage Car Insured?
Salvage-title car owners have to inform the insurance company about all damages sustained by the vehicle. Some insurers require photographs to evaluate the condition of the car when it was damaged. In addition, owners are generally asked to provide detailed information about the repairs performed and submit vehicle title information. Most states require salvage title cars to have an inspection certificate from the DMV. This inspection certificate has to be provided to the insurance company to get the vehicle insured. Alternatively, an inspection document may be obtained from a professional garage if local laws don't require a police inspection or DMV certificate.
Do Insurance Companies ask for High Premiums on Salvage Cars?
Because it is considered high risk insurance, premiums for salvage auto insurance will be higher than for other vehicles. There is little point in paying a yearly premium that is more than what you are paying for the car. You will have to decide if it's worth saving a few dollars on a salvaged car only to pay it out in insurance premiums.
While insurers that offer liability coverage along with comprehensive coverage, charge a higher premium, salvage title car owners are advised to re-consider purchasing comprehensive and collision coverage, as the actual worth of a salvage car is significantly lower than a car with a clear title. Thus, the payouts towards claims would be considerably low. Salvage vehicles that pass DMV inspection can be reissued a clear title. Once the car has a clear title, it's easier to negotiate a lower insurance rate with the insurance company.
Where Do I Purchase Insurance for a Salvage Car?
Major US auto insurance companies include Progressive, Allstate, Nationwide and State Farm Insurance, amongst others. Since the insurance coverage and related laws differ in individual states, it's best to contact these major insurance companies to ask about salvage title car insurance and insurance premiums. Salvage car insurance vendors fall into two broad categories:
- Traditional insurers: Traditional insurers like State Farm andAllstate consider salvage title vehicles on a case by case basis. You may find it difficult to receive any more than public liability and property damage (PLPD) insurance on a vehicle with a salvage title. The insurance company will not want to take on the potential risk of a salvaged vehicle. For example, if a salvage vehicle is involved in another accident, how do you determine what major damage came from the first accident? The agent will require you to disclose the vehicle's history when you get your policy, so be sure to inform them of the salvage title. Otherwise any collision or comprehensive insurance you purchase with be made void when the vehicle's salvage history is discovered.
- Online insurers: Visit Autoinsure.org to get a quote on salvage vehicle PLPD coverage. Online insurers may offer more competitive rates than a traditional agency, but make sure that the insurer knows of the vehicle's salvage history.
How to Lower Salvage Car Insurance Premiums
Auto repair costs can be significant when restoring a salvage vehicle, but sufficiently rebuilding your car to the standards of the road can help to lower the cost of your car insurance for that same vehicle. Similarly, boosting the car's mpg rating by improving its overall performance may help in some cases as well. Follow these steps to find the lowest salvage car insurance premiums and to further lower them over time.
Have Your Car Inspected
Although salvage title cars do have lower blue book values, one of the main problems with auto insurance for these vehicles is that without visually inspecting them, the insurance company doesn't really know what the car is actually working, or for that matter, how safe it is. Hidden chassis damage or other problems can make a vehicle less safe, thereby influencing its risk rating. Some insurers won't even work with salvage car insurance, just because of the mystery value involved in these vehicles.
Once you've thoroughly repaired your salvage vehicle, make sure it is up to the standards for operational vehicles in your jurisdiction. One of the first things you can do as a salvage title car owner is agree to have the vehicle inspected by a professional ASE certified mechanic. Working with a licensed mechanic or other car expert will ensure your salvage car performs adequately. Having taken the time and effort to repair the car, hire a certified inspector or inspection agency to examine the vehicle. Get an emissions test, a smog check and any other inspections that may be relevant to your area or to the insurance company that you plan to work with.
By providing an auto insurance company with certification of your salvage car's performance, you give evidence the car is likely to operate just as well as other used or new cars on the road. One of the biggest concerns that insurance companies have when formulating policies for rebuilt salvage cars is that those cars are more likely to break down or suffer other damages than new cars. By proving your car is on the same level as new vehicles, you can convince the insurance company to keep your auto insurance premiums at the same rate as other non-salvage vehicles.
Drive Carefully and Safely
Your car insurance premiums go up as a result of traffic infractions and citations, regardless of the vehicle you drive. In order to keep your premiums as low as possible on your salvage car insurance, drive carefully and ensure you do not commit any moving violations, even if you're driving another vehicle. A proven record as a safe driver can help to keep insurance premiums as low as possible.
Clean Up your Driving Record
If you have committed violations that have caused your car insurance to increase in price, look into ways of cleaning your driving record so that you can lower your premiums once again. Many states offer driver education and safe driving courses that, once successfully completed, can nullify infractions that occur on your driving record. By completing these courses, you not only prove to an insurance company you're committed to driving safely (which generally lowers your insurance once again), but you also help to clean your driving record for the purposes of employment applications and other non-driving matters.
Related Questions and Answers
Is a Salvage Title the Same as a Rebuilt Title?
No, a salvage title is a separate type of title from a rebuilt title. However, they can apply to the same car over the course of its lifetime. A salvage title is given to a vehicle that has suffered major damage due to accident, fire, flood or other calamities. The vehicle is not drivable and cannot be licensed. Salvage title cars are normally sold to rebuilders who either plan on rebuilding the car or using it for parts. If they chose to rebuild the car, it will be given a rebuilt title as long as it passes the state inspection. Granting a rebuilt title allows the car to be licensed and sold, but also warns the buyer that they are purchasing a car that has been completely rebuilt.
Can Insuring a Salvage Car Make it Have a Regular Title?
No, a salvage car will remain a salvage car until it is rebuilt, and then it will be given a rebuilt title. The majority of salvage cars are un-drivable and cannot be legally licensed, so an insurance company will not be willing to insure it. When a car has been rebuilt and has a rebuilt title, it can then be insured. There is no legal way to give a salvage car a regular title. The reason for this is to make buyers aware that a car has been severely damaged and then rebuilt. While rebuilt cars can be insured, it is often more difficult and expensive to insure.