How to Insure a Vehicle With A Salvage Title

How to Insure a Vehicle With A Salvage Title

How to Insure a Vehicle With A Salvage TitleDo you own a salvage car or do you intend purchasing one? Then it is vital for you to understand the hurdles you may encounter during its registration or insurance process. A car becomes salvage when an auto insurance provider considers it a total loss, meaning the repairs cost (after a loss, such as a flood an accident) is higher than the actual cash value of the vehicle.

After a car is estimated to be a total loss, the owner or auto insurance carrier is required to notify the state’s DMV that the car has been totaled. Depending on the individual state, the vehicle will be issued what is known as a “salvage certificate” or a “salvage title.”  This title implies the car cannot be driven, sold, or registered in its current condition.

From there, if the car is repaired, your state’s DMV will have to examine the car to establish if it is roadworthy. During the repair process, documentation is essential. Have receipts, records, and photos. The DMV of your state will probably require you to have the bill of sale and salvage title. Bear in mind, at this stage, your car isn’t legal to drive, so you will have to get it towed to the inspection facility. Once the car has passed inspection, you will receive a re-branded title signifying that the car has been rebuilt.

Another thing to remember: every state has different fees, processes, and nuances, particularly if you bought the salvage car out of state. You will want to research the DMV’s procedures of your state before buying a salvage car to ensure it is worth your effort and cost.

If you own a car that’s repaired and has been inspected by the state and considered roadworthy, it is still not legal to operate. Apart from New Hampshire, you will have to have it insured before you can take it out on the road. This is the next obstacle.

Some insurance providers won’t insure a salvage car or they may not give optional coverages such as comprehensive and collision. Some insurance carriers figure they are not able to establish an actual value on a salvage car as opposed to a car with a clean title, and they are cautious to offer collision coverage, but may give liability coverage. Other insurance providers may provide full coverage, so it is best you shop around and speak with more than a few agents and providers who may be able to determine what coverages are available for your exact car.

If you are looking to buy a salvage car and have it insured, while there are some extra hoops to jump through to get insurance and a re-branded title, some vehicle purchasers find it’s a great value. Salvage cars are probably to have a sticker price that is well below the cost of a similar car with a clean title. For many, this is too good of a deal to pass up.

While some purchasers might find it financially feasible, others may find it to be more of a headache than it is worth. Before purchasing a salvage car, understand why it was considered a total loss. Was it a flood? An accident or vandalism? Do you foresee this car as having an issue that could likely pass your state’s annual inspection? If you aren’t confident in repairing and maintaining a car, it is good to consult with a trusted local mechanic who might be able to figure out any potential problems or downsides to the specific car you are interested in.

As with any financial decision, we strongly recommend you research and understand the model and make of the car, your state’s laws, and what insurance providers are willing to give in terms of coverage before making a final decision on purchasing, repairing, and insuring a vehicle with a salvage title.

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