Salvage Car Insurance

Salvage cars sustained some sort of catastrophe, whether it be an accident or natural disaster, and were considered totaled by the insurance industry. Salvage car insurance is a specialty policy that may only offer partial coverage depending on the kind of vehicle being insured and the kind of damage. Scroll down to learn more and get free salvage auto insurance quotes from local companies.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Jun 4, 2021

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Salvaged automobiles can often be purchased at public car auctions. However, in most cases buyers should be aware that these are very often distressed vehicles that have been involved in serious accidents. They also may have suffered severe damage due to fire, flood, storm damage or other acts of nature.

Whether you’re insuring a brand new car or something you picked up from a junkyard, you’ll find the best policies online by putting your ZIP in the FREE box on this page!

When most serviceable vehicles are auctioned off, they are at least represented as being halfway dependable and reliable used cars. The biggest caution, if you are looking to buy a car at auction, is that what you see is what you get. There are no warranties or guarantees sold with a car at auction. The car may run and then again, it might not.

Salvage Car versus Used Car

Most used cars have a public track record. Services like CarFax provide prospective car buyers with an accurate repair history of most any car. Cars are digitally tracked via VIN numbers and other methods, to provide owners with records of major repairs. These records warn buyers to steer clear of cars that have been involved in serious accidents or other misadventures.

Salvage cars are most often defined as vehicles that have survived some sort of catastrophe, remaining one step ahead of the demolition squad. If they were insured, these vehicles were considered totaled by their respective insurance companies.

Owners of cars that are either destroyed or fully written off by their insurance providers are paid full market value for their cars. Following payment, ownership transfers to the insurance companies who would then take legal possession of the battered remains.

Vehicles that weren’t immediately sold off for parts or for scrap might be transported to other areas of the country to be sold to often unsuspecting consumers as used cars.

There is nothing inherently wrong with this system, if prospective buyers are given the straight scoop about the cars’ history, including any calamity or catastrophic damage the cars might have suffered while on the road with their former owners.

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What Totaled Means

The term totaled can conjure up images of cars that have been involved in devastating accidents, flattened like pancakes, blown up, or burnt to a cinder. The process of totaling a vehicle, from an insurer’s standpoint, is more about math than the actual physical damage suffered by the vehicle.

Simply stated, if the cost to repair a damaged vehicle is greater than the estimated market value of the vehicle before the accident, the car is usually written off, or totaled by the insurance provider. The insurance company is essentially buying the car from the consumer. Following this transaction, the insurance provider has several options, which include scrapping the car if it is beyond repair.

Much of the time, the insurance company will sell salvage cars to salvage yards for parts, or if the cars are in drivable condition, to auction houses or other dealers for resale to the general public. As mentioned above, as long as potential buyers are aware of the vehicle’s origin and condition, this is a legal and commonly accepted practice.

If you choose to keep and repair the damaged car, your insurance company will deduct a calculated residual or salvage value. They will then send you a check for the balance of the car’s market value.

Most insurers total a vehicle when the cost to repair exceeds 80% or 90% of the car’s market value at the time of the accident.

Salvage Title

Most states require that salvage vehicles be issued special title documents, which proclaim their status to everyone. However, vehicles which are issued these special titles are often very difficult to insure. Depending on the state and the insurance company, salvage cars may only be eligible for partial coverage, even if they appear roadworthy for all other intents and purposes.

Auto insurance providers may refuse to insure salvage cars altogether.

Salvage Car Insurance

Can you insure a car with a salvage title? Yes, but don’t expect the task to be easy and don’t expect your insurance company to provide anything more than basic liability insurance. This information comes from Discovery’s Howstuffworks website.

Of course, in any event your salvage vehicle is only insurable should it be roadworthy and meet your state’s vehicle inspection requirements. Vehicles that do not meet these regulations would not need liability coverage, as they would not be driven on public roads. These rules also make sense in regards to salvage vehicles, cars that have been judged totally destroyed.

If you take a salvage car on the road, and are involved in an accident, you can still cause the same amount of damage as with a non-salvage vehicle. Therefore, full personal liability and property damage insurance would be necessary.

On the other hand, many car insurance companies wouldn’t consider providing collision or comprehensive insurance for a vehicle considered to be beyond repair. The insurance companies that offer collision coverage would usually only cover up to 80% of the salvage vehicle’ value.

The question remains, under these circumstances, would you even want collision coverage if it were available. The premium rates wouldn’t be any different from for a regular car, but as described above, the coverage amounts would be significantly less.

Remember, despite what a normal car might be worth, an automobile with a salvage title will always retain that designation and reduced market value. For the most part, insurance providers will refuse to provide comprehensive coverage on salvage vehicles.

Lenders and finance companies usually require comprehensive coverage.

Most salvage car transactions are accomplished using cash rather credit sources so owners are not pressured into purchasing anything more than personal liability protection. For the most part, conventional lenders will not finance salvage cars, which forces consumers to use cash for most salvage car transactions.

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Insurance Companies Limit Totaling

The practice of totaling a vehicle that may otherwise look fine, but have internal hidden damage, brings peace of mind to the owner of the damaged car and fulfills the terms of most common auto policies.

However, according to CNN, this practice results in increase car insurance rates for all consumers. Many insurance providers are in the process of revising their rules regarding totaling a damaged vehicle, choosing to issue repair checks to policy holders rather than paying out full value and scrapping the car.

Auto manufacturers, in concert with insurance companies, are working diligently to make this possible by reducing the cost of vehicle repairs. New developments in after-market auto parts as well as design changes in many auto components is helping to pave the way for sharply reduced repair bills for heavily damaged vehicles.

Even greater saving could be achieved in future years as automakers such as Ford Motors have opened new design facilities. Ford recently cut the ribbon on a brand new $650,000 facility, its Paint and Body Technology Center located in Inkster, Michigan, only 20 minutes from Ford’s world corporate headquarters in Dearborn, MI.

This new center came about as a result of a merger with Ford’s safety crash test analysis department. Other major auto companies are joining Ford in their efforts to find new technologies to bring down the cost of catastrophic auto repairs.

Chrysler and General Motors have opened similar plants in other areas of the United States.

New technologies allow repair shops to restore vehicles to their pre-accident conditions more efficiently and cheaply. Insurance providers, manufacturers, and design engineers working together with this single goal in mind. Ultimately, consumers benefit with lower insurance premium payments as well as longer lasting and dependable vehicles.

Keep Right on Driving

Many vehicle owners have decided, on their own, to legally keep a vehicle that has been officially totaled on the road, according to MSN Money. For those without the means to buy a new car, this can be a huge benefit.

In these difficult economic times, consumers are often forced to make do with what is on hand or what they can afford. Keeping a damaged car on the road, or replacing it with a salvage vehicle purchased at auction are far more viable and commonly sought alternatives than ever before.

For those vehicle owners who would like to keep their salvage cars on the road, the Property Casualty Insurers Association of America has produced a valuable report, listing salvage title requirements for all 50 U.S. States and the District of Columbia.

If drivers insist on keeping a salvage car on the road, it is imperative that the car be judged mechanically sound and that it be properly insured. While it can be a hassle to obtain a legal salvage title and liability insurance coverage, these requirements are meant to protect the safety and well-being of all drivers on American highways.

Drivers should be wary of any vehicle that has been severely damaged and make sure that repairs have rendered the vehicle safe to drive once again. According to a recent article in the Dallas News, insurance companies are increasing salvage values on damaged cars; thereby reducing the amount they will spend to repair these vehicles.

Only a competent mechanic can determine if a salvage car will be safe to drive and worth the hassle of insuring and keeping on the road. So if you’re going to deal with salvage cars, please be careful and investigate the matter thoroughly before making a final decision on purchasing, repairing, or driving such a vehicle.

Find insurance for salvage cars, auction vehicles, and automobiles of all types just by putting your ZIP in the FREE box on this page!

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