Finding insurance for a vehicle with a salvaged title can be a challenge. These types of vehicles are all around you. These are vehicles that had severe damage and deemed a total loss by an insurance company that paid a claim on the vehicle. A total loss means the cost of the repair would exceed the value of the vehicle. Vehicles that have severe structural damage are usually the first vehicles that are too expensive to repair to justify after factoring in the market value of the vehicle. Bent frames from an accident and flooding (think hurricane area vehicles) are the most common vehicles with salvaged titles. Since vehicles have softer and lighter materials now and are computers on wheels, it does not take much for a damaged vehicle to be declared a total loss by insurance companies.
Some individuals and companies will purchase these damaged and flooded out vehicles - repair them and re-sell them. The rules vary by state. In many states, the repaired vehicle must be inspected by the state highway patrol/trooper's office to be considered "street legal," meeting all safety standards. The vehicle title itself will indicate that the vehicle is salvaged by having the words "salvaged title" stamped at the top. In some states, the salvaged title form will also be a different color from the non-salvaged title vehicles.
There is a strong market for vehicles with salvaged titles. Many times the insurance companies will sell the damaged vehicles after the claim is settled through auctions. Many of the auctions are filled with owners of independent car dealerships/lots also known as “Buy Here Pay Here” lots. Some car enthusiasts attend these auctions because they may seek a “dream car” or a “project” to restore. Some body shops will dip their toe into the ever-increasing inventory of total loss vehicles. “Junk yards” and classified ads can also be a source for salvaged title vehicles.
Insuring a salvaged vehicle can be a challenge as many of the larger insurance carriers are beginning to shy away from insuring them. The insurance carriers are nervous about the structural integrity of many of these vehicles. Many insurance carriers have strict underwriting rules that will refuse to insure them, some will only offer liability coverage but no coverage for theft, vandalism or collision otherwise known as "full coverage." Some carriers who will offer "full coverage" require a mechanical inspection and multiple photo views of the vehicle. Many people would avoid a vehicle with a salvaged title if they knew ahead of time the difficulty that can be involved in getting insurance on it. In the case of an older "classic" vehicle (usually 25 years or older and not driven regularly), there are classic and specialty insurance companies that will insure the vehicle at an agreed value.
Go to sites like CarFax.com to confirm the status of the vehicle using the Vehicle Identification Number (VIN). This simple step can usually help identity a vehicle that was deemed a total loss from a prior claim and listed with a salvaged title, including those involved in a flood. However, some structural damage may not ever be reported if a severely damaged vehicle is repaired by a cash paying person. Some of the “buy here, pay here” lots will advertise they have free “CarFax” reports for their vehicles. Be careful, many have been caught falsifying those reports. Having an independent mechanic thoroughly inspect a vehicle can also help identify a vehicle that has unseen structural or flood damage.
So, all good deals may not always be good in the end. Do your research ahead of time. If you decide to purchase a salvaged title vehicle, call your insurance company ahead of time to confirm the company underwriting rules. If you have more than one vehicle, it may cause you to have to leave one insurance company or split the coverage of your vehicles between multiple insurance carriers."
Tracey Wells is an Agency Owner for Farmers Insurance in Grayson, Georgia