If my car has a salvage title and I have an accident, what does my insurance pay for?

Before purchasing a vehicle with a salvage title, you should be aware of the insurance implications and the potential complications you may face when filing a claim. Each state has different laws governing salvage titled vehicles, and each insurance company has different policies on how to insure these vehicles as well as how to treat them in a claim.

Salvage title

If your vehicle has a salvage title, it means that it was declared a total loss by an insurance company at least once in the past due to a collision, theft, or any other reason. In order for you to legally drive it, it must be modified to your state’s legal standard and be inspected by the department of motor vehicles, state police, or other authorized agency. Regardless of the quality of the repairs, you can never take away the salvage brand title. This will have an impact on your future insurance claims on that vehicle.

Insuring a salvage vehicle

You may have trouble insuring a vehicle with a salvage title. Some insurers may refuse to issue a policy of coverage entirely, and others may only offer you liability insurance. If you have a policy that provides only liability, you are not insuring your vehicle at all, and therefore the salvage title has no impact on potential settlements. If you can get comprehensive or collision coverage that protects the vehicle from physical damage, the insurance company will consider the salvage title when building a settlement.

Salvage value

Vehicles with a salvage title are often worth less money than the same vehicle without it. This is due to the perception that the event that caused the salvage title made the car permanently less safe. The extent to which a salvage title devalues ​​a vehicle depends on many factors, but in general you should expect your salvage car to sell for 10 to 50 percent less than an equivalent vehicle with a clean title. If you total your car again, your insurer will pay you the reduced salvage value instead of the regular sale value.

Assessment

In general, insurers must evaluate each recovered vehicle individually to determine the impact of the salvage title. The appraisal service will take into account the various aspects of the vehicle, including its age, make, model and normal sales value. Banks do not typically make auto loans for repossessed cars, so salvaged titled vehicles must be inexpensive enough for a buyer to pay in cash. An appraiser may also consider the type of person most likely to buy that car and the purpose for which they will most likely use it. The evaluator will recommend an appropriate percentage to remove it from the regular sale price.

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