Car insurance laws vary all across the United States. No matter the laws in your area, you may find salvage title vehicles difficult to insure. There are a few reasons for this. The documentation for the title is complicated, the specific rules of declaring a car "rebuilt" vary by location, and they’re an insurance risk not every company is willing to take.
Trying to find car insurance coverage for a salvage title can be difficult, but it is possible. Knowing where to look and what kind of coverage you're likely to get can help smooth out the process.
- A salvage title is a vehicle that’s been damaged to the point it’s too expensive to repair.
- If an insurance company decides a car is not worth fixing, the title is turned over to the DMV.
- To register a salvage title vehicle, the vehicle must be repaired and inspected to ensure all the parts were legally acquired.
What Is Considered a Salvage Title Vehicle in California?
Major car accidents, vandalism, and natural disasters like flooding can all put your vehicle in jeopardy of having its title labeled salvage in the state of California. A salvage is officially defined as any vehicle that has been "wrecked or damaged to an extent that it is considered too expensive to repair."
There's some flexibility in determining when a car would be "too expensive to repair," and it falls on either the owner or the insurance company to make that determination. Since insurance companies usually pay for repairs, it usually falls on insurance companies to determine when a vehicle should be labeled as a salvage.
Once an insurance carrier determines that a vehicle is not worth fixing, the title is turned over to the department of motor vehicles (DMV).
While there's no set ratio in California, you may find that many insurance companies determine that a repair is too expensive if the cost of repair surpasses 80% of the vehicle's value.
An Example of a Salvaged Title Vehicle
Let’s say that a man hits a deer square in the front of his 6-year-old Chevy. The vehicle's front end is pretty banged up, and the airbag deploys. The man has comprehensive coverage, so he is fully covered. He files a claim and the insurance adjuster assesses the car.
It is determined the Chevy was valued at $5,500, and the cost of repairs would be $4,800. To determine the percentage of damage, you would take the cost of repairs ($4,800) and divide those costs by the value of the vehicle ($5,500). In this case, the equation results in 0.87, or 87%.
That means that the cost of repairs is 87% of the vehicle's worth. The insurance company in this scenario would likely determine that the Chevy isn't worth repairing, so it would register it as a salvage title vehicle with the DMV.
Salvaged Vehicles Don't Always Look Wrecked
In many cases, a salvage title vehicle will never again be insurable or legally drivable—the damage makes the car irreparable and unsafe. Even if a car looks fine, the engine could be ruined.
Floods cause major mechanical damage that isn't always obvious to the casual observer. This damage can be cosmetically masked, but the car is still unsafe to drive. Other times, your vehicle could technically be repaired, but it isn't cost-effective to do so. Either way, salvage vehicles usually make their way to the junkyard and are sold for scrap metal and parts.
How to Reregister a Salvage in California
If you are determined to restore a salvaged vehicle, the first step (after repairing the vehicle) is to fill out an application for a title or registration. When you get to the DMV, they will want to see the bill of sale or some other form of proof that you legally own the vehicle.
The vehicle will also need to be inspected by the DMV or the California Highway Patrol (CHP) to be approved for driving and to ensure that all of the parts were legally acquired. Call CHP ahead of time to make an appointment. Expect to pay a $50 total loss salvage inspection fee.
You'll also need brake and light adjustment certificates. Once all your inspections are complete and you have all your proper certificates, the final step is to pay additional title and registration fees.
You could also need further inspections and certificates, depending on the specifics of your situation. Other common requirements include smog certification and a weight certificate.
Car Insurance Is Required to Drive Legally in California
Whether you're registering a brand new car or a restored salvage, you'll need insurance coverage to legally drive in California (as well as nearly every other state). The problem with revived salvage titles is that some preferred insurance carriers may not want to cover them at all. You may have to do some searching to find the coverage you need.
Start your search with your current car insurance carrier. Always be forthcoming about the vehicle's details, even though many companies may not like that it's a restored salvage title. Providing false or incomplete information could leave you with the wrong kind of policy.
If your current car insurance carrier will not insure a revived salvage title, your next best chance is to explore options with high-risk insurance agencies.
The Bottom Line
While there are many steps involved in restoring a salvage title, the two most difficult are fixing the damage and obtaining proper insurance coverage.
As far as insurance goes, obtaining a liability-only policy may be your best bet. California's minimum car insurance coverage is 15,000/30,000/5,000. However, you may find that you're better protected in the case of a severe accident by increasing those limits to 100,000/300,00/100,000.