Can a Car with a Salvage Title Receive Full Coverage?

I have a salvage title for my car and need to know if I can insure it with full coverage.

A salvage title shows that a vehicle was totaled in the past. Typically, a “totaled” vehicle is one that sustained damages in excess of 75 percent of the car’s pre-accident value. A car insurance company usually makes this determination and then sells the totaled vehicle at an auction to recoup some of its losses. If an individual or a dealership purchases the vehicle, significant restorations will be necessary to make the car roadworthy again. Once the vehicle is ready for resale, it must carry the designation of salvage-titled vehicle to give buyers a heads up about its history. Every state has a different way of categorizing “title brands.” Aside from salvage title, you may see names like reconstructed, restored, rebuilt, junk, reconditioned, repaired, unsafe, and non-repairable.

Insuring Salvage-Titled Vehicles

In addition to the obvious safety concerns, owners of salvage-titled cars also have to worry about insurance issues. Because the average salvage title vehicle is worth about 40 percent less than the same vehicle with a clean title, insurers offer significantly reduced benefits for these vehicles. If your insurer will provide full coverage for a salvage-titled vehicle, the payout you will receive if you file a claim will be minimal. This applies to physical damage coverage claims, or claims against your collision or comprehensive coverage. Some insurers may up your rates if you insure a salvage-titled vehicle because of the safety risks of these vehicles.

Physical Damage Coverage

Some owners may not be able to get any physical damage coverage for a salvage-titled vehicle. Whether physical damage coverage is available will depend on the insurance company and state laws. Most car insurance companies will provide liability, medical payments, and uninsured/underinsured motorist coverage for vehicles with salvage titles, but collision and comprehensive coverage are much more difficult to get. Certain states do not allow insurers to provide full coverage on salvage-titled cars. If your state and your insurer allow physical damage coverage for your salvage-titled vehicle, you should consider if the premiums for the coverage are worth it. A salvage title reduces the actual cash value of the vehicle substantially, so you wouldn’t get much benefit from purchasing collision and comprehensive.

Prerequisites

Before an insurer will offer coverage on a salvage-titled vehicle, it will likely have to pass an inspection first. State law usually requires salvage-titled vehicles to be inspected by the state police or the DMV. Your insurer will probably want a copy of the inspection certificate in that case. In states where an inspection is not mandated by law, your insurer might ask you to obtain a “garage report” on the vehicle, which is a certificate that indicates that vehicle is safe and roadworthy.