Finding reliable transportation that fits your budget might lead you to purchase a vehicle with a salvage title. After snagging your new ride, independent insurance agents can help you set up the right coverage for your salvage title auto.
In the meantime, it may be useful to cruise through some information about salvage title insurance.
What’s a Salvage Title?
Salvage title insurance is protection specifically for a car with a salvage (aka branded) title. To qualify for a salvage title, the vehicle has typically experienced one of the following scenarios:
- Serious damage from an accident or a natural disaster (e.g. hurricane, flooding).
- Has a manufacturing defect.
- Has an altered odometer.
Any of these situations could cause the car to be proclaimed a total loss. According to the Kelley Blue Book, cars with salvage titles typically have 50% less value than an equivalent, non-salvaged car.
Once you buy the car, have it rebuilt, and it passes a state inspection, you can then apply for a “rebuilt title” to drive on public roadways.
Obviously buying a salvage title car and then getting it insured properly will be a slightly different experience than normal. That’s why contacting an independent insurance agent is your best action plan.
What Is Salvage Title Insurance?
Salvage title insurance isn’t really a unique type of auto coverage. It is simply car insurance applied to a vehicle with a salvage (or rebuilt) title.
Most insurance companies will sell you a basic liability insurance policy for your salvage title automobile. This is reasonable when you consider that the car passed a state registration inspection. Plus you are not at a higher risk of hitting another driver because your car has a salvage title.
What Does It Cover?
Liability is the easiest policy to buy for your salvage title auto. Liability insurance will safeguard you when an accident happens and you’re at fault. Adding comprehensive and collision to your coverage is possible, but a little tricky.
Bottom line: Many insurers won't sell you full coverage for a salvage vehicle. Insurance carriers that will sell you comp and collision tend to reduce the overall benefits.
In the case of a future claim, the insurance company may only pay 80% of the salvage car’s market value. This is definitely better than nothing, but is a fact worth considering when insurance shopping.
What Does It Cost?
Automobile insurance is always based on factors such as the car’s year, make, and model. Of course, the driver’s motor vehicle record has a big influence on the final premium, too. This is no different for salvage title cars. Even though your vehicle’s value has been downgraded, you should not expect to receive a special discount.
In fact, some insurance companies add a 20% surcharge when the insured vehicle has a salvage title or rebuilt title.
An independent insurance agent will be able to secure a variety of quotes and give you the best pricing options.
Who Sells Salvage Title Insurance?
It’s been estimated that 20% to 30% of automobile insurers do sell salvage title insurance. A few of these carriers are:
- The Hartford
- National General
You may have a good chance of getting coverage from the insurance company that auctioned the vehicle. This is because they already know specifics about the damage and can better evaluate the risk involved. However, there’s no guarantee the carrier will offer the lowest price.
Check with an independent insurance agent, since they are able to quote coverage from multiple carriers. This increases your chances of finding great coverage at a reasonable cost.
What Documentation Will You Need?
Car insurers will probably ask you to submit copies of the following documents before issuing a policy:
- Salvage (or rebuilt) title
- State vehicle registration
- Vehicle Identification Number (VIN)
- Mechanic’s report or appraisal
The insurance company may perform their own inspection as well.
In addition, the car insurance company may review the resources below to learn more details about your salvage title automobile.
- The National Insurance Crime Bureau (NICB), to confirm the vehicle is listed as having a salvage title.
- The National Motor Vehicle Title Information System (NMVTIS) for a review of the vehicle history and condition.
- CarFax is also helpful when verifying the vehicle’s history and condition.
Protecting the Salvage Car of Your Dreams
Maybe you finally found that dream muscle car or classic convertible in a salvage yard. Perhaps you have plans for giving your recycled ride some TLC before cruising freeways and highways. Of course, before you are able to plan a road trip, you will need to buy salvage title insurance.
Don’t bother wasting time searching for an insurance company willing to offer salvage title insurance at a reasonable price. It’s always best to work with an independent insurance agent in your community. One-stop shopping with an independent agent will get you insured and on the road much quicker.