Buying salvage cars can be a great way to save money. Salvage vehicles are typically put up for sale at used car auctions by insurance companies that had to write off the cars after a major accident, or after they were stolen and recovered. This means these cars are often bargain-priced.
This is true even when you consider the money you will need to spend to repair the car for it to be drivable. If you can do the work yourself, you will be able to save even more money.
However, not everyone is enthusiastic about buying a salvage car and then rebuilding it to roadworthy status. In fact, most insurance companies are often hesitant to provide more than basic coverage to rebuilt salvage vehicles.
Why Insurers Are So Wary of Salvage Cars
There are some good reasons for insurance companies to be so reticent to provide more than just basic coverage for a salvage car. In a way, this is a byproduct of how salvage vehicles are evaluated and declared roadworthy in many states.
While the requirements that salvage cars have to meet in order to be considered rebuilt and eligible for registration and insurance will differ from one state to another, for the most part they’re relatively similar – and these requirements are simply insufficient for a car insurance provider.
Typically a vehicle will need to be inspected by a state official in order to be given “rebuilt salvage” title, which allows the car to be put back on the road. However, the nature of the inspection the salvage car is given does little in the way of determining if the car is safe to drive. Instead, the state is much more concerned about whether there were stolen parts used in rebuilding the vehicle, and that’s what these inspections check for.
With no guarantees as to how mechanically sound the car actually is, insurers then err on the side of caution and consider the majority of salvage vehicles poor risks when it comes to providing insurance for physical damage sustained to the car in the form of comprehensive or collision coverage.
What This Means for Salvage Car Owners
Since you now know why insurance companies don’t like salvage cars, you can take steps to alleviate the misgivings that your insurer might have about your salvage vehicle. The best and most straightforward way to accomplish this is to ask if your insurance provider would like to inspect your vehicle themselves.
This gives the insurer a chance to get a first-hand look at the condition of your vehicle and to document its current physical state. This information can serve as a baseline in the event of an accident in the future, making it easier to determine what damage an insurer is responsible for.
Typically, an insurer will provide a list of locations where agents or mechanics acting on behalf of the insurer can be found. You can then schedule an appointment to bring your vehicle in, and the agent will do the rest.
In most cases, you can expect your car to be photographed from several different angles, sometimes both inside and out, while the agent or mechanic takes notes or fills out a checklist or form for the insurer to look over. You’re often given a carbon copy of this form, or a receipt for the inspection.
You will be informed by your insurer at a later date if your car is in good enough shape to warrant higher insurance coverage. It is likely that you will still have to pay a higher monthly premium. This new price might be less than competitive, as your car is still a rebuilt salvage vehicle, but it’s often better than you can expect from other insurers who might just dismiss the idea of providing coverage for your car outright.