Can You Get Insurance on a Car With a Salvage Title?

Securing vehicle insurance involves navigating various policy types and coverage options. Non-standard titles, such as salvage titles, introduce complexities. Understanding how insurance companies evaluate and underwrite policies for these vehicles is important for owners to anticipate challenges and obtain coverage.

Salvage Titles and Insurability

A salvage title indicates a vehicle has sustained significant damage, leading an insurance company to declare it a “total loss.” This occurs when repair costs exceed a percentage of the vehicle’s pre-damage value, or when damage is impractical to repair. Causes include collision, fire, flood, or theft recovery with missing parts or vandalism.

Insurance companies hesitate to provide coverage for vehicles with a salvage title due to inherent risks. The full extent of damage may be difficult to assess, potentially hiding structural or mechanical issues. Determining the true value for underwriting is challenging, as its market value is considerably lower than a comparable clean-title vehicle.

A vehicle with a salvage title cannot be legally driven on public roads in most jurisdictions, and cannot be insured with standard policies. However, these vehicles can become insurable after specific repairs and meeting certain conditions. The path to insurability involves a change in the vehicle’s title status from salvage to a “rebuilt” designation.

Making a Salvage Vehicle Insurable

Transforming a salvage-titled vehicle into an insurable one involves comprehensive repairs and a change to a “rebuilt” title. All damage must be professionally repaired to meet safety and structural standards, ensuring the vehicle is roadworthy. This process addresses all issues that led to the vehicle being declared a total loss.

Documentation of all repairs is crucial. This includes detailed records of every repair performed, along with receipts for all parts and labor. These records serve as evidence of the vehicle’s restoration and are necessary for subsequent inspections and title applications.

Following repairs, the vehicle must undergo a mandatory state-level inspection. This verifies all repairs are correct, the vehicle meets safety standards, and it has been properly reassembled. Passing this inspection is a prerequisite for changing the vehicle’s title status from salvage.

After a successful inspection, the owner can apply for a rebuilt title with the state’s Department of Motor Vehicles (DMV). The application requires specific forms, fees, and submission of supporting documentation, such as the original salvage title, repair receipts, and inspection certificates. This process formally acknowledges the vehicle’s restoration and makes it eligible for insurance.

Securing Insurance for Rebuilt Vehicles

After a vehicle is repaired and issued a rebuilt title, obtaining insurance can begin. Finding an insurer willing to cover rebuilt vehicles can be challenging, as not all companies offer such policies. It is advisable to seek insurers specializing in high-risk vehicles or those with specific programs for rebuilt-titled cars.

The application process for a rebuilt vehicle requires specific information and documentation. Insurers request the rebuilt title, copies of inspection reports, and detailed repair records. The vehicle identification number (VIN) verifies the vehicle’s history and current title status.

Insurers may require their own inspection or appraisal to assess the vehicle’s condition and market value. This helps evaluate remaining risk and establish coverage terms and premiums. Such assessments are standard practice for rebuilt vehicles due to their prior total loss history.

Coverage Types for Rebuilt Vehicles

For vehicles with rebuilt titles, obtaining liability insurance is generally straightforward and often legally mandated for road use. Liability coverage includes bodily injury and property damage, providing financial protection for damages or injuries the insured vehicle causes to other parties in an accident. This type of coverage is typically available from most insurers for rebuilt vehicles.

Securing collision and comprehensive coverage for rebuilt vehicles often presents challenges. Many insurers are hesitant to offer these full coverage options due to the vehicle’s history of extensive damage, which can make it difficult to distinguish between new damage and pre-existing conditions. If available, these coverages may come with higher premiums, reflecting increased risk.

A key consideration for rebuilt vehicles is how insurers determine their value in the event of a total loss claim. Rebuilt vehicles are commonly valued at a reduced percentage of their pre-salvage market value, often 20% to 40% less than a comparable clean-title vehicle. This reduced valuation can lead to significantly lower payouts, impacting the financial recovery for the owner.