Insurance Salvage Vehicles: What's The Deal?

An insurance salvage vehicle is a car that has been damaged in an accident or other incident and written off by an insurance company as a total loss. This means that the cost of repairing the vehicle exceeds its market value, so the insurance company pays out its value to the owner instead of covering repair costs. These vehicles are assigned a salvage title, indicating that they are not roadworthy and cannot be legally driven or insured. However, it is possible to restore a salvage vehicle to a roadworthy state and obtain a rebuilt title, which allows the vehicle to be insured and driven again. This process typically involves repairing the vehicle, completing the necessary paperwork, and undergoing inspections to ensure the vehicle meets safety standards.

What is a salvage title?

A salvage title is a legal document that indicates a vehicle has been damaged beyond its fair market value and has been declared a total loss by an insurance company. This usually occurs when the cost of repairing the vehicle is higher than the car's worth.

When a car has been declared a total loss, either its owner or the insurance company can apply for a salvage title, depending on who will take possession of the vehicle. The process for obtaining a salvage title varies from state to state but typically involves filling out an application, paying fees, and submitting the car to a salvage vehicle examination. This examination assesses the extent of the damage and the vehicle's overall condition.

A salvage title is often required before a vehicle can be repaired and put back on the road. The repairer must then obtain a new branded title, usually called a rebuilt salvage title, from the state's motor vehicle agency. The exact wording of this new title can vary by state, but common labels include a rebuilt title, restored title, previously salvaged title, and reconstructed title.

It is important to note that a vehicle with a salvage title has little financial value and may be difficult to insure or resell. There may also be financing limitations when purchasing a salvage title vehicle, as banks and financial institutions are often reluctant to provide loans for these cars.

Additionally, a salvage title vehicle may have compromised structural integrity, which could result in higher insurance claims in the future. As such, it is crucial to have a salvage title vehicle inspected by a qualified mechanic to ensure it is safe to drive.

Can you insure a salvage title vehicle?

A salvage vehicle is a car that has been totally disabled as the result of a collision, flooding, or other jarring events. The insurance company has determined that it would be cheaper to give the insured driver a settlement based on the full value of the vehicle rather than attempting to make all the needed repairs.

In most US states, including California, you cannot get car insurance for a salvage car. However, it is possible to get a salvage vehicle insured if it has been sufficiently repaired and rebuilt. In such cases, the vehicle will receive a "rebuilt" or "restored" title status, and can be insured and driven on the road.

To get a salvage vehicle in California to the point where it can be insured, you will need to take the following steps:

• Take the vehicle to an authorized mechanic for repairs.
• Keep track of all bills and repairs made, including documentation of the damage before the repairs and all parts purchased.
• Photograph the vehicle before and after the repairs.
• File the required documentation with the California DMV, including an Application for Title or Registration, proof of ownership, a salvage title certificate, and a Statement of Facts.
• Schedule an inspection with a salvage title inspector, as well as all standard inspections required of all vehicles.
• After all repairs, documentation, and inspections are complete, go to the DMV to begin the registration process for your vehicle.

Even after a salvage vehicle has been repaired and restored, finding insurance coverage can be challenging. Many national insurers are hesitant to cover a vehicle with a rebuilt title due to its previous salvage status. Some insurers will only sell liability insurance for a car with a revived title, meaning they won't pay for any physical damage to the vehicle. Additionally, insurance for a car with a revived title may be more expensive than insurance for a standard vehicle.

How to get a rebuilt title

A rebuilt title certifies that a car, once deemed a total loss by an insurance company, has been restored to a drivable condition. The car needs to have a salvage title first, indicating that it has been totaled and is unsafe to drive. This can be replaced with a rebuilt title once a mechanic has restored the vehicle.

Step 1: Apply for a Salvage Title

Firstly, you will need to apply for a salvage title, which shows that the car has been severely damaged and was deemed a total loss. You will need the car's original certificate of title, as well as a completed salvage title application form. If you have lost the original title, there may be an additional application fee. You may also need a lien release and a check or money order payable to your local Department of Motor Vehicles (DMV).

Step 2: Make the Necessary Repairs

Once you have received the salvage title, you can begin making any necessary car repairs yourself or with a licensed mechanic.

Step 3: Get a Vehicle Inspection

After the repairs have been made, the vehicle must pass a safety inspection to ensure it is roadworthy. This can be done at a body shop licensed by the state, or a valid inspection station.

Step 4: Gather Documents to Get a Rebuilt Title

Once the vehicle has passed inspection, you can apply for a rebuilt title. The documents you will need include:

• The car's salvage title
• A completed application form for a rebuilt title
• The Vehicle Examination Certificate, obtained within a certain timeframe before the application
• A bill of sale indicating the purchase price (if applicable)
• Proof of auto insurance
• A rebuilt vehicle statement, including details of the repairs made and who made them (if applicable)

Step 5: Submit Your Application

Finally, submit your application and supporting documents to your local DMV or county tax office, along with any applicable fees.

It is important to note that the process and requirements for obtaining a rebuilt title may vary by state, so be sure to check the specific regulations in your area. Additionally, a rebuilt title will not clear the car's damage history, and there may be challenges with insurance coverage and financing due to the vehicle's history.

Insurance limitations for vehicles with revived titles

A "salvage" vehicle is likely to be in bad condition, having been damaged in a collision, flood, or other jarring events. The insurance company deems it a total loss, and the owner receives a settlement based on the vehicle's full value.

A salvage vehicle cannot be legally driven or insured. However, it can be restored and re-registered with a "revived" or "rebuilt" title, recognising that the vehicle has been rebuilt and is now roadworthy.

• It can be challenging to find an insurance company that will cover a vehicle with a revived title. Some companies do not insure these vehicles at all, while others place limitations on the coverage offered.
• You may only qualify for liability coverage, which meets the state's minimum requirements. Full coverage beyond the state-required minimum may not be offered by most insurance companies.
• Insurance for a revived title vehicle may be more expensive than for a vehicle with a clean title due to the higher risks and lack of uniformity in the value and repair costs of rebuilt cars.
• The insurance payout for a revived title vehicle is likely to be lower than for a comparable car with a clean title if the vehicle is totalled in an accident.
• Some companies may require documentation of the vehicle's repairs or their own vehicle inspection before providing insurance.
• Reselling a vehicle with a revived title can be tricky, as many buyers are hesitant due to safety concerns.

Overall, while it is possible to insure a vehicle with a revived title, there are limitations and challenges to be aware of, including higher costs and more limited coverage options.

Is buying a salvage title vehicle worth it?

Whether buying a salvage title vehicle is worth it depends on several factors, including your budget, your mechanical skills, and your intended use of the vehicle.

Pros of buying a salvage title vehicle

• Cost savings: Salvage title vehicles are generally much cheaper to buy upfront compared to cars with clean titles.
• Customisation: With a salvage vehicle, you have the opportunity to customise and modify the car to your preferences.
• Learning opportunity: Working on a salvage vehicle can be an educational experience, especially if you're interested in mechanics.
• Good deal for mechanics: If you're a trained or amateur mechanic who enjoys putting in the work, you can get the most out of a car that's suffered extreme damage.
• Good source of car parts: Even if a car is unsafe or unreliable to drive, it could be a great source of car parts, especially if you're looking for older car parts that are hard to find at a good price.

Cons of buying a salvage title vehicle

• Safety concerns: The safety of salvage vehicles is often severely compromised during wrecks. In some cases, repair shops cut corners to avoid investing money in products with low resale value.
• Repair costs and reliability: Even if it's been restored, a salvage title car could still have long-term mechanical issues that never resolve completely, resulting in ongoing repair costs that might outweigh the car's original price.
• Limited financing and insurance options: Most lenders are reluctant to provide loans for vehicles with salvage titles, and it can be challenging to find an insurance company that will cover a salvage title vehicle.
• Resale challenges: Many buyers are hesitant to purchase cars with salvage titles due to concerns about their safety and long-term reliability, so reselling a salvage title vehicle can be tricky.
• Fraudulent advertising: Some sellers might resort to dishonest tactics, such as hiding damages or advertising repairs they haven't made, to sell salvage title vehicles.

Factors to consider when buying a salvage title vehicle

• Research your state's requirements: Each state treats salvage titles differently, so it's important to understand how local regulations will affect your purchase.
• Get the car inspected: Have the car inspected by a trustworthy mechanic to get a good understanding of the damage and any potential safety concerns.
• Think about financing options: It can be difficult to arrange financing for a salvage vehicle, so look for a car you can buy outright without taking out a loan.
• Look at the vehicle's history: Get a detailed vehicle history report to know exactly what happened to the vehicle, when it happened, and what kind of restoration it received.

Ultimately, buying a salvage title vehicle can be worthwhile for experienced mechanics seeking a low-cost project or enthusiasts looking for customisation opportunities. However, for everyday drivers, the risks, uncertainties, and potential safety concerns often make it not worth the hassle, especially considering the challenges associated with financing, insuring, and reselling these vehicles.

Frequently asked questions