You can buy a salvage car on the cheap, but you may not want to. A car receives a salvage title after an auto insurance company deems the vehicle a total loss. This happens when the expected repairs will cost more than the car is worth.
Insuring a salvage car can be a challenge, but it is possible — here’s what you need to know about the process.
Learn more: How does car insurance work? The basics explained.
You can’t insure a salvage title vehicle as is. A total loss declaration implies the car has been damaged extensively and may be unsafe to drive. The incidents that can lead to a total loss declaration include serious collisions, extreme weather, fire, or vandalism. These can result in structural, electrical, and safety systems issues. And since the car insurance company chose not to repair the car, the full extent of the damage may still be unknown.
Insurance underwriters generally consider unsafe vehicles too risky to insure. State motor vehicle departments also don’t want dangerous cars on the road. For these reasons, you must complete repairs and have the car inspected before it can be insured.
Learn more: What happens when your car is totaled?
Ideally, you should begin the process of insuring a salvage title before you buy the vehicle. Each state has different regulations for salvage cars, so it’s helpful to know what to expect before you commit to the purchase and the process.
After reviewing your state regulations and buying the car, you’ll want to get it repaired and inspected prior to securing insurance and an updated title. Follow these steps to insure a salvage vehicle.
Your state sets the rules for titling salvage vehicles. Before you invest in a total-loss car, research your state’s requirements for repairs, titling, inspection, and insurance.
Learn more: Minimum car insurance requirements in all 50 states
Some states prohibit individuals from buying salvage title cars. If you’re not an auto dealer, dismantler, or exporter, you may have to wait until the car is rebuilt to buy it. If you can purchase the car, get a bill of sale that includes the car’s year, make, model, and VIN.
Learn more: How your vehicle’s make and model affect car insurance costs
Some states require salvage car rebuilders to be licensed. If you have mechanical expertise, you may be able to obtain a license and complete the repairs yourself. Be sure to document your work with photographs before, during, and after the repairs. Keep the old parts and all receipts. Alternatively, you can find a licensed rebuilder to complete the repairs for you.
Depending on your state’s rules, your DMV inspector may ask to see a bill of sale, repair receipts, and replaced parts. Some DMVs focus on verifying that the car was not stolen and doesn’t use stolen parts. Other states may want a detailed report of the repairs made. Note that you can’t drive your repaired salvage car to the DMV because it’s not yet legally roadworthy. Make arrangements to have it towed or speak to your local DMV about other options available.
Learn more: Does car insurance cover theft?
Some states, like Texas and Florida, may require you to insure the car before you apply for a rebuilt title. Not all insurers offer the right coverage. You may have to present a bill of sale, documentation of repairs, and the state inspection report.
You need a rebuilt title to drive the car legally on public roads. Applying for a rebuilt title usually involves forms, fees, and documentation. If your state doesn’t require proof of insurance with the application, plan on insuring the car immediately after registration.
Where to start: Although not all insurance companies will insure a salvage title, Allstate, GEICO, Farmers, State Farm, Liberty Mutual, 21st Century, National General, Safeco, Nationwide, and Infinity are some options that do.
Insurance premiums are higher on salvage cars that have been repaired and inspected versus cars with standard titles. The vehicle’s condition before and after the repairs may be factors. For example, GEICO will insure rebuilt title vehicles for as low as $55/month, according to Clearsurance.
Salvage titles are reserved for totaled cars that have not been repaired, inspected, and registered. You can’t legally drive a salvage title car on public roads.
Rebuilt titles apply to previously damaged vehicles that have been repaired, inspected, and registered. Some states use other names for this title class, such as rebuilt salvage, reconstructed, or restored salvage. You can legally drive and insure a car with a rebuilt title.
Expert tip: With standard titles, you have many full coverage plans to consider. But when it comes to a salvage title, it’s unlikely you’ll have any full coverage options — unless it’s repaired and you’re able to convert the title from salvage to a rebuilt title car.
Some insurers may offer full coverage on salvage vehicles at their discretion, but only after the car has been repaired and inspected. Out of all the types of car insurance, liability insurance will be the easiest to find. Uninsured motorist, personal injury protection, and medical payments coverage may also be readily available. However, comprehensive insurance and collision insurance are more difficult to obtain for salvage cars.
Learn more: Liability-only vs. full coverage car insurance: Which is better for you?
Yes, salvage cars are more expensive to insure. You should budget more for insurance on your salvage car than what you’d pay for a vehicle with a standard title.
Yes, you must disclose a salvage title to your insurance company. Your insurance provider can easily research the vehicle history and its title status. Withholding the information could result in your insurance policy getting canceled or your insurance claim getting denied.
Learn more: How to file a car insurance claim
Salvage insurance is expensive because these cars may have many lingering and unknown issues after being rebuilt. Any problems with structural parts, electronic components, or safety systems could raise the likelihood of another accident or increase the cost of repairs later on.
Learn more: How much does car insurance increase after an accident?
Jamie Young and Tim Manni edited this article.
