Can You Insure a Vehicle with a Salvage Title?

No, car insurance cannot be obtained for automobiles with salvage titles. Salvage cars are those that have been deemed a total loss, rendering them too damaged to be worth repairing and legally unfit for driving. Once a car has been declared a total loss, it is typically destined for the scrapyard unless it undergoes sufficient repairs and is rebuilt. While insurance companies do not provide coverage for cars with current salvage titles, it is possible to obtain coverage if you have the vehicle repaired and inspected by a state-certified mechanic. If the car is deemed safe to drive, the Department of Motor Vehicles (DMV) can issue it a rebuilt title. However, even with a rebuilt title, you may have limited auto insurance coverage options.

What Is a Salvage Title?

When a car is involved in an accident, and the cost of repairs exceeds a certain percentage of the car’s value (which can vary by insurance company and jurisdiction), the insurer may declare it a total loss. This means that the cost to repair the vehicle is deemed uneconomical compared to its market value. In such cases, the insurer may offer to pay the owner the market value of the car rather than covering the repair costs.

As for the salvage title, it is a title issued by the relevant authority (such as the DMV) to a vehicle that has been declared a total loss by an insurer (in most cases). This title indicates that the vehicle has suffered significant damage and may not be roadworthy in its current condition. It also serves as a notification to potential buyers that the car has been involved in a severe incident.

Such vehicles can be repaired and a new registration document may be issued for it with a designation that says “rebuilt” auto. Roughly, 2.5 million vehicles are totaled every year and 1.5 million of them return to the roads after being rebuilt, according to Consumer Federation of America.

Is It Hard to Get Insurance on a Rebuilt Title?

Securing insurance for a vehicle with a rebuilt title can present difficulties due to insurers’ reservations about covering extensively damaged cars. There are legitimate concerns regarding the quality of repairs, the use of previously damaged parts, and the challenges of valuing such vehicles.

While the exact percentage of rebuilt title cars with suspect airbags is uncertain, there have been concerns raised about their safety. It is important to ensure that repairs have been conducted properly to minimize the risk of accidents or injuries. These concerns are often shared by auto insurers.

Insurers may be hesitant to provide comprehensive and collision coverage for rebuilt title vehicles, as assessing their value can be complex. Valuation sources like the Kelley Blue Book typically do not offer specific values for these cars. As a rough estimate, rebuilt title vehicles are often considered to be worth around 50% of similar vehicles with clean titles. Another concern for automobile insurance companies is that it is hard to determine which damages were previous and which are caused by a recent accident they cover so it may cost to repair a vehicle that was totaled before.

Finding insurance coverage for such vehicles may require additional effort, as the number of carriers willing to provide quotes may be limited. Nevertheless, it is still possible to find affordable policies from reputable insurance providers with thorough research and diligence work. Generally, many companies would offer liability only coverage, while there would be only few companies (if any) to offer full coverage car insurance with Collision and Comprehensive.

Even if you find full coverage, you should keep in mind that you are most likely to get paid a lot less for actual cash value if it is totaled again, due to the fact that cars with rebuilt titles are a lot cheaper in comparison to similar make, model, age and condition cars with clean titles.