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The Guide to Salvage Cars and Insurance Coverage

Date: 10/21/2015 |Category: Car Insurance, Salvage Cars

The opportunities represented by a decent salvage vehicle are many and rewarding. Here’s everything you need to know about salvage cars, getting them insured, and everything in between.

What a “Salvage Car” Is

In every US state, there are laws to govern the fate of motor vehicles that have been damaged to the point where the cost of repairing the vehicle is a substantial percentage of the total value of a vehicle. In most states, this can be anywhere from 60 percent to 90 percent of the value of a car or truck. When this happens, an insurer typically buys the car off the owner as a write-off, trades in its title certificate for one with the word “salvage” branded on it, and then disposes of the vehicle.

Often, insurers sell these salvage vehicles at used car auctions. Companies and individuals can buy these cars and then do with them as they see fit – either use them for parts, or rebuild them to put them back on the road. However, restoring a salvage car to a drivable state can be hard work.

Restoring a Salvage Car

Any vehicle with a “salvage” title is illegal to drive, even if it’s still mechanically sound. This means you’ll not only have to repair the car or truck yourself (or have it repaired on your behalf), you’ll also need to show to your state’s motor vehicle division that the car is ready to be driven again. This means you’ll have to bring it to a certified inspection facility.

While each state’s laws are different, you’ll typically need to present a large number of documents to your inspecting officer. Documents like your bill of sale, your salvage title, and receipts for any replacement parts you bought for the car are likely to be included. In some states you need to provide photographic evidence of the entire reconstruction process, so make sure to check your local laws thoroughly before beginning work on your salvage car.

Insuring Your Restored Salvage Car

If you pass your inspection, your car will be given a new, “reconstructed” or “rebuilt salvage” title instead of its old one. For all intents and purposes, this new title lets you register and insure the car once more. However, when it comes time to get new insurance cover for your rebuilt salvage vehicle, your insurance company most definitely takes notice.

Rebuilt salvage cars are not usually welcome by insurance companies, as there’s no guarantee that the work done on the car was enough to make it safe to drive. This is because the state inspection is typically concerned with making sure all the parts used to repair the car weren’t stolen.

You’ll routinely be able to get a minimum level of insurance like personal liability and property damage, as it doesn’t involve insuring the vehicle against damage directly, but if you do want physical damage insurance for your rebuild salvage vehicle you’ll need to take one more step.

In many cases, an insurer may request that you submit your rebuilt salvage car to one more inspection. This one, though, is much more concerned with documenting any visible damage to your vehicle. An insurance agent will take a look at your car and may even take several photographs of the interior and the exterior to create a record of your car’s condition.

Once this is done, your insurer is usually much more comfortable offering you collision or comprehensive cover for your rebuilt salvage car.

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