Can You Insure a Salvage Title in Texas?

Many individuals wonder if a vehicle with a salvage title can be insured. While a vehicle carrying a salvage title is generally not insurable for road use, a specific process in Texas allows for its transformation into a status that enables legal driving and, consequently, insurance coverage.

Understanding Texas Vehicle Titles

A salvage title in Texas is issued when a vehicle has sustained severe damage, typically determined by an insurance company as a total loss. This designation means the cost of repairs exceeds the vehicle’s actual cash value immediately before the damage occurred. Such damage can result from accidents, floods, or fire.

In contrast, a rebuilt title signifies that a previously salvaged vehicle has undergone necessary repairs and passed a stringent inspection process. This “rebuilt salvage” branding indicates the vehicle has been restored to a roadworthy condition and is eligible for legal registration and operation. The distinction is important: a salvage title restricts a vehicle to parts or repair, while a rebuilt title permits its use on public highways after meeting state standards.

Obtaining a Rebuilt Title in Texas

Converting a salvage title to a rebuilt title in Texas involves a process. The initial step requires repairing the vehicle to a safe and operable condition, documenting all work and retaining receipts for all parts purchased. For major components like the engine, frame, or vehicle body, receipts for replaced parts are mandatory.

Once repairs are complete, the vehicle must pass a state safety inspection, which includes an emissions test if the vehicle is in a county requiring such an inspection. This inspection must occur after repairs are finalized. An original Vehicle Inspection Report (VIR) is required as part of the application.

After repairs and inspections, several forms must be submitted to a county tax assessor-collector’s office. These include the original Salvage Vehicle Title, Form 130-U (Texas Certificate of Title Application), and Form VTR-61 (Rebuilt Affidavit). This form requires explanation of work performed and origin of any component parts. Proof of current liability insurance ($30,000 for bodily injury per person, $60,000 for bodily injury per accident, and $25,000 for property damage) is necessary if the vehicle will be registered.

Associated fees include an $8.00 application fee for the salvage title, a $65.00 rebuilt fee, and a $33.00 title application fee. Registration fees, approximately $76.25 for vehicles under 6000 pounds, and sales tax, typically 6.25% of the vehicle’s purchase price, may also apply.

Insuring a Vehicle with a Rebuilt Title

Insuring a vehicle that has been issued a rebuilt title in Texas is generally possible, though it presents unique considerations. Liability insurance, mandated by state law, is typically obtainable for rebuilt vehicles. This coverage addresses damages to other parties if the rebuilt vehicle is involved in an accident.

Securing comprehensive and collision coverage can be more challenging. Due to the vehicle’s history of significant damage, some insurers may be hesitant to offer these types of coverage, or they might require an independent inspection of the vehicle before extending a policy. Contact various insurance companies or an insurance broker to explore available options and ensure full disclosure of the vehicle’s rebuilt status.

Insurance premiums for rebuilt vehicles may be higher. Insurers often perceive these vehicles as carrying an elevated risk, which can lead to increased rates, sometimes reflecting a 3% to 6% rise. This adjustment accounts for potential latent issues or the difficulty in assessing the full extent of prior damage.

In a total loss, a rebuilt-titled vehicle’s valuation will likely be lower than a comparable clean-titled vehicle. The market value of a rebuilt vehicle is typically depreciated, often by 20% to 40%. This means the payout from an insurer, should the vehicle be totaled again, would reflect this reduced valuation, potentially paying less than 100% of the claim amount. When seeking insurance, providers will typically request the Vehicle Identification Number (VIN), a copy of the rebuilt title, and in some cases, photographs of the vehicle to assess its current condition.