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What is Salvage title? US States Rebuilt Title Rules Car Insurance

What Do I Need to Know about Insuring Salvage Cars?

By Mike Richards Updated: 05/22/2019 Posted: 10/22/2015

If you’re looking for the cheapest used cars out there, you can’t do better than salvage cars. These vehicles, which are most often found up on the block at public used car auctions, are some of the most affordable vehicles you can find.

However, there is a catch. Salvage cars are illegal to drive, even if they’re mechanically capable of being driven. Instead, you have to document and prove that a salvage vehicle has been rebuilt before you can get it registered as a regular vehicle once again. It’s also what you have to do before you can insure the car once more.

State Laws and Salvage Cars

Salvage car laws are regulated on a state-by-state basis. This means that depending on where you live in the country, the path to getting your salvage vehicle repaired and re-insured can differ widely. In some states, you can do all the repair work yourself, or by someone else if you prefer. In others, you can only have the needed repairs done on a salvage car by only a few certified repair centers.

In some states, you may need to present detailed photographic records of your entire repair process to the state before your car can be certified as rebuilt, while in many other states it’s enough to simply provide receipts for any parts you might have purchased to replace damaged or missing ones in your car.

State laws also differ when it comes to the minimum amount of insurance you’re required to keep on your vehicle at all times. However, for the most part, you’re required to have what’s called PLPD coverage – personal liability and property damage insurance.

This level of cover is available for salvage cars as well as vehicles that haven’t been through the salvage rebuilding or reconstruction process. However, when it comes to higher levels of insurance coverage – those that provide protection against damage to your vehicle itself – insuring a salvage car can be much more problematic.

Why Insurers Don’t Like Salvage Vehicles

If you’ve got a freshly rebuilt salvage vehicle that’s been given the green light by your state’s department of transportation or similar entity, you obviously need to get it insured. As stated above, bare minimum insurance coverage is available to you, but many insurers will balk at providing physical damage insurance such as comprehensive or collision insurance coverage.

There’s a reason for this reluctance. Insurers don’t like salvage cars, even rebuilt ones, because there’s no knowing how damaged the car actually is even after it’s been restored.

Insurers have no assurances that a rebuilt salvage car has been reconstructed to any sort of standard. This is because, in the majority of states that require salvage car inspections, these inspections have little to do with whether the car is safe to drive.

Instead, inspectors take a close look at the paperwork of the vehicle to ensure that the parts used in its reconstruction were obtained legally. This means that just because a car has been declared to be a “rebuilt salvage” or a “reconstructed salvage” car under state law, this has little bearing when it comes to what kind of shape the car is in.

Keeping Insurance Companies Happy

However, there are steps you can take to reassure a car insurance company to the point where it will offer you collision or comprehensive insurance. The process, in many cases, can be relatively simple – you just need to subject your rebuilt salvage vehicle to yet another inspection. However, this time the car insurance company itself will be handling it.

This inspection, which is usually undertaken by an insurance agent, is geared much more towards documenting any possible damage your salvage car still has. Your vehicle will typically be photographed from several angles to create a visual record of your car.

Once this is done, your insurer now has a baseline to start from in the event that you do have an accident that damages your rebuilt salvage car – and it will be much more comfortable in offering you physical damage coverage.

Find information on Rebuilt Title Laws for Each US State. Explore our Vehicle Auctions, as well as finding more information about How These Auctions Work.