Buying a used car is often a great way to save money, but sometimes shoppers come across vehicles listed with a salvage title at prices that seem too good to pass up. While the savings can be appealing, insurance coverage for these vehicles works differently than for cars with clean titles.
Understanding how salvage titles affect insurance can help you avoid surprises after purchase. Our guide below explains what a salvage title means, how insurance companies handle these vehicles, and what buyers should consider before making a decision.
A salvage title is issued when an insurance company declares a vehicle a total loss. This usually happens when repair costs exceed a large percentage of the vehicle’s value.
Common reasons vehicles receive salvage titles include severe accidents, flood damage, fire damage, or other major events. After a vehicle is declared a total loss, it is often sold at auction to be dismantled or rebuilt.
In some cases, the vehicle is repaired, inspected, and returned to the road with what is typically called a rebuilt or reconstructed title. Even after repairs, however, the vehicle’s history remains attached to it.
Is Pet Insurance Really Worth It?
Insurance companies typically view salvage or rebuilt vehicles as higher risk. Because of this, coverage options may be more limited compared to vehicles with clean titles.
In many cases, drivers can still obtain required liability coverage, but protection for the vehicle itself may be harder to secure. Some insurers decline to offer collision or comprehensive coverage, while others may require inspections or set lower claim payout limits due to the vehicle’s reduced value.
Coverage availability can vary significantly between insurers, making it important to check options before buying.
A salvage or rebuilt vehicle can sometimes be a reasonable purchase, but it comes with tradeoffs buyers should understand.
Potential advantages can include:
• Lower purchase price
• A chance to buy a newer vehicle for less money
Buyers should also be aware of potential drawbacks, including:
• Hidden mechanical damage
• Lower resale value
• Limited insurance coverage options
• Potential financing challenges
That’s why having a trusted mechanic inspect the vehicle before you purchase it is strongly recommended.
Choice & Value: Why an Independent Insurance Agent Offers More
Can I insure a salvage title vehicle?
Yes, most drivers can obtain liability coverage, which is required to legally drive in most states. However, full coverage options may be limited or unavailable depending on the insurer and the vehicle’s condition.
Will insurance cost more?
It depends. Liability coverage rates may be similar, but coverage for the vehicle itself may cost more or provide reduced protection due to the vehicle’s lower value.
Will insurance pay full value if the car is damaged again?
Not usually. Because salvage vehicles are already considered diminished in value, claim payouts are often based on that lower value.
Should I talk to an agent before buying?
Absolutely. Speaking with an insurance agent before purchasing helps you understand coverage options and avoid unexpected problems after the sale.
Talk with a trusted insurance team before you buy
A salvage title vehicle may save money upfront, but insurance limitations and resale challenges can offset those savings. Understanding coverage options ahead of time helps you make a smarter decision.
If you’re considering purchasing a salvage or rebuilt vehicle, the Roehr Insurance team can review your options and help you find coverage that fits your needs and budget, giving you confidence before you hit the road.
