Saving a Salvage Vehicle Could Crush Your Car Insurance Quote

Driving a totaled or salvaged car may cost less upfront, but your insurance options may be limited and expensive.

Aubrey CohenMay 27, 2015
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A car that was rebuilt after being totaled in an accident — often called a salvage — can appear to be a great deal. But salvage car insurance could come with higher quotes than a typical policy.

Here’s what to consider before buying a car with salvage or rebuilt title, or repairing your own totaled car.

Salvage title, explained

After an accident, an insurance company’s obligation is to pay the cost of repairs (minus a deductible, if that applies), but only up to the value of the car before it was damaged. When the damage reaches a certain threshold, insurers generally will consider the car “totaled” and pay out the pre-crash actual cash value. Your car is then shipped off to the junkyard.

Some insurers deem a car totaled when the cost of repairs, plus the damaged car’s value for parts, surpasses its pre-damage value. Others do so at lower levels of damage. Many states set minimum thresholds in their insurance regulations, such as 75% or 80% of the pre-crash value.

If you want to keep your totaled car, the insurance company will subtract the salvage value from its payout. Once your vehicle is marked as salvage, states forbid driving the car until it has been repaired and inspected.

Insurance downsides of a salvage title

The title for a car will show whether it has ever been declared salvage. This declaration could affect you if you’re shopping for a used car or deciding whether to rebuild a car that has been declared totaled. A used car with salvaged title might be a good deal, or repairing your totaled car might appeal to you more than shopping for another vehicle. Even after they are repaired, though, these cars can have lingering issues, such as bent frames, faulty electrical systems, missing airbags or mold. That’s why they cost less to buy.

Some insurance companies, such as Esurance, simply will not issue policies for cars with salvage titles. Allstate, Esurance’s parent company, also generally doesn’t cover such cars. Farmers Insurance, on the other hand, will provide all coverage, with no premium increase, once such a car is certified as roadworthy.

In between these extremes, some companies will only provide liability coverage for cars with salvage or rebuilt titles or charge extra.

So, if you’re thinking about buying a car with salvage title or refurbishing your totaled vehicle, you may need to shop around for auto insurance quotes from several companies to find one that will provide the coverage you want at the best price.

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