If your car has been damaged so severely that repair costs would be higher than its pre-damage worth, then it may be considered a salvage vehicle by your insurer and your state. While repairing a salvage vehicle might be a chore, insuring it could prove to be even more challenging.
Learn how a car or truck becomes a salvage title vehicle, how states differ in expectations for restoring vehicles, and insurance coverage options for a salvage vehicle.
- A salvage vehicle is an insurance and title status given to a car that has been so badly damaged that repair costs would be higher than its pre-damage worth.
- In order to insure a salvage vehicle, you must apply for title reclassification which may be referred to as a "previously salvaged,” “restored salvage,” “rebuilt salvage,” or "operable salvage" title status.
- The terms used to designate salvage vehicle titles and the certification processes vary by state.
- Insurers may extend liability insurance for a salvage title vehicle.
- Many carriers will not provide comprehensive and collision coverage due to the vehicle’s decreased value.
What Are Salvage Title Vehicles?
“Salvage” is an insurance and title status typically designated by insurance companies, in accordance with state regulations and the DMV. A car may become a salvage vehicle if damaged sufficiently by fire, flood, theft, collision, or other perils, such that it’s deemed to be a total loss.
An insurance company might acquire a salvage title after paying a total loss claim to the owner. Or, the car’s owner might acquire a salvage title if they keep their total loss car. However, a vehicle can attain a salvage title in some cases when it’s not damaged, such as if it’s stolen.
In fact, the term “salvage title” means different things in different states. For example, in Minnesota, salvage titles are only offered for:
- Vehicles 6 years old or newer
- A car worth $9,000 or more before damage
- A vehicle with a gross weight rating of more than 26,000 pounds
But in general, when a car is deemed a salvage vehicle, it often can’t be registered, titled, driven, or parked on any public or state roads until it has been repaired and inspected. Because of this, it typically can’t be insured either until it’s been repaired and passed inspection.
“Once a car has been totaled, it is no longer considered eligible for use on public roads, and thus it does not qualify for auto insurance,” said Christopher Boggs via an email interview with The Balance. Boggs is executive director of risk management and education at the Independent Insurance Agents & Brokers of America.
Putting a Salvage Vehicle Back On the Road
If you want to repair a salvage title vehicle to sell it or return to the roads, you may be able to request an upgrade to the salvage title. After being repaired and passing a salvage and/or safety inspection, the title could convert to a title status such as:
- Operable salvage title
- Rebuilt or rebuilt salvage
- Previously salvaged
- Restored salvage
Once a car qualifies as a “rebuilt” vehicle or another status that indicates it’s been repaired, inspected, and met state requirements for road operation, you may be able to re-title and insure it. However, it’s likely that a decal or other notation of its salvage status will be permanently affixed to the vehicle’s record.
Some salvaged cars are auctioned off at a salvage auction or may be deemed “junk vehicles” and used for parts.
How Does Salvage Title Insurance Work?
Many insurance carriers refuse to provide coverage for a vehicle with a salvage history—especially where physical damage coverage is concerned. So obtaining insurance for a car with a rebuilt title can be difficult. Any rebuilt or restored salvage vehicle will be tarnished with the information that it’s been totaled in the past, and even a car that looks fine cosmetically could have defects in the computer and safety devices.
“Insurance carriers often see salvage vehicles as unfavorable because they are unable to assign the correct risk to the vehicle,” said Josh Damico via an email interview with The Balance. Damico is vice president of insurance operations at Jerry, an automated compare-and-buy car insurance service app. “The value of the vehicle can vary, so it is not a risk most carriers are willing to take,” Damico said.
Even Kelley Blue Book (KBB) notes that a salvaged or reconstructed title has a permanent negative impact on the car’s value—usually between 20% to 40%. But KBB advises consumers to privately appraise a salvaged vehicle to better determine its true value.
What Does Salvage Title Insurance Cover?
Common insurance coverage includes:
- Liability: Pays for damage you cause to someone else or their car or property
- Uninsured/underinsured motorist: Pays for your injuries caused by an uninsured or underinsured driver
- Medical payments/personal Injury protection: Pays your accident-related medical bills, no matter who is at fault
Most states require bodily injury and property damage liability, uninsured/underinsured motorist, and personal injury protection.
According to Damico, a driver could get liability insurance for a vehicle with a salvage title with certain carriers, but “most carriers would not be able to add comprehensive and collision.” He added that these coverages may not be necessary due to the vehicle’s decreased value.
“Ultimately, what is and isn’t covered depends on the carrier, and some will require an inspection of the vehicle to show it has been repaired before offering full coverage,” Damico said.
Salvage Title Insurance Rules
In most states, obtaining insurance for a salvage vehicle is similar. You won’t be able to get insurance for the car until you’ve gone through the process of cleaning up the car’s salvage title through repairs, inspections, and paying fees.
This may include undergoing a salvage inspection, plus providing proof of ownership, the insurance adjuster’s report on needed repairs, and proof of those repairs to your state’s department of motor vehicles. With the new “rebuilt,” “restored,” or “operable” status, the car is drivable and, theoretically, insurable.
For example, in New York, you can’t legally operate a vehicle branded as salvage or get it insured until it passes an inspection. If the car is determined to be in a safe condition, the state’s Department of Motor Vehicle (DMV) will issue a new “Rebuilt Salvage: NY” title. Once you have the title, you can begin your search for insurance.
However, going through these steps and passing inspection doesn’t mean you’ll easily find coverage from an insurance company.
Frequently Asked Questions (FAQs)
What car insurance companies cover salvage titles?
As a sampling, the Jerry app works with more than 50 car insurance companies, but those providing salvage title insurance, Damico explained, are less than a dozen.
Challenges stem from insurance carriers and their underwriting standards. So you may need to shop around quite a bit to find an insurance company willing to provide your vehicle with the coverage you desire.
Is it worth it to insure a salvage title?
Even if a state clears a rebuilt salvage car for use on public roads, the owner must find insurance before registering and driving the car on those roads.
If you can’t find insurance with your current carrier, you may have to investigate your state’s market of last resort, also known as an assigned risk plan, Boggs said. “This might be the owner’s only option.”