What is a Salvage Title?
A car is given a salvage title because it has been written off by an insurance company. In many cases, this happens because the damage the car has sustained in a collision, flood, fire, or other catastrophe makes it more cost-effective for the insurance company to pay the owner the value of the car as it was before the damage than it is to repair it. In other cases, however, salvage cars are cars that have been stolen and then only recovered after they had been written off.
State Rules to be Declared Salvage
Every state is different. For some states, a car is designated as “totaled” if the cost to repair it would be 70% of the actual value. In some states, it’s 60%, and in a few states, it might be as little as 50%. Usually, you can visit the DMV site for your state and find out exactly what the percentage is before a car is considered to be totaled.
Getting Coverage
Most of the time, your insurer will not want to cover your salvage vehicle. That’s because it’s difficult to determine its value. It’s also because if a car has been totaled once, insurers consider it to be too much of a risk to insure a second time.
If you’re trying to get insurance coverage for a salvage vehicle, you have to be honest with your insurance company. Tell them that it’s a salvage car before you ink the deal. Don’t think for a minute that they won’t find out that it’s a salvage vehicle – they will.
Now, what you have to do is prove that the car is roadworthy. Many insurance companies will offer you Public Liability and Property Damage coverage on a salvage car, but after having repaired the vehicle, you might prefer to get comprehensive and collision insurance.
Most of the time, you’re going to have to agree to have a representative of the insurance company inspect your vehicle to determine that it fulfills the required standards. Salvage cars may have significant safety issues, so insurers will be reluctant to provide collision and comprehensive insurance, and it’s up to you to satisfy the company that the car is roadworthy.
What Does Salvage Title Insurance Cover?
If your insurance company agrees to cover your salvage car, you might not get a big payout if the car ends up being totaled again. You may also find that you have to pay a high deductible and high premiums. However, since you got such a great deal on your salvage vehicle, the savings realized at the point of purchase may well offset the additional costs you’ll incur on the insurance end.
What are the Pre-Requisites?
If you’re going to insure a salvage car, you will have to tell your insurance company about any and all damage that the vehicle sustained. You may also have to provide photographs that show the condition of the car when you bought it, as well as photos showing the repairs you have made. Most states also require that a salvage car be submitted to a DMV inspection, which is given to the insurance company.
What About Premiums?
You can expect your premiums to be higher than they would be for a non-salvage vehicle. So you’re going to have to think about what you paid for the car as weighed against the cost of the insurance premiums. There’s not much point in saving money on a salvage vehicle if all those savings are eaten up in premiums.
Where Can I Buy Insurance on a Salvage Car?
Most major insurers will provide you with coverage on a salvage car, albeit at high premiums.
Lowering Your Premiums
It can cost a lot to restore a salvage vehicle, and even more to insure it. But if you rebuild the vehicle to acceptable standards, your insurer may be a bit more cooperative. Have the car inspected and make sure it fulfills the standards. Submit it to an inspection by your insurance company. You want to prove to the company that your salvage car will work just as well, and be just as safe, as any other car on the road.
Here’s another tip, and it actually applies to any vehicle, not just a salvage car – drive carefully and safely, and don’t commit any moving violations. Your record as a driver helps to keep your premiums low. If your driving record is poor, consider taking a safe driving course. That will clean up your driving record, and lower your insurance rates.
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