Insuring a salvage car can seem daunting. With terms like “salvage title,” “rebuilt title,” and “totaled vehicle” floating around, it’s easy to feel overwhelmed. But the good news is, yes—it is possible to insure a salvage car. However, doing so comes with extra steps, documentation, and often more restrictions than insuring a regular car. This comprehensive guide breaks down what a salvage car is, how to insure it, what to expect in terms of cost and coverage, and tips to make the process smoother.
What Is a Salvage Car?
A salvage car is a vehicle that has been deemed a total loss by an insurance company. This means the cost to repair the car after damage—whether from an accident, flood, theft, or natural disaster—exceeds a certain percentage of its value, typically around 70% to 80%. Instead of paying for repairs, the insurance company compensates the owner for the vehicle’s actual cash value and takes possession of the car, branding it with a salvage title.
A salvage title is a legal classification that indicates the car has suffered significant damage and is not roadworthy in its current condition. However, these cars are often sold at auctions to individuals or businesses who repair them, after which the vehicle may receive a rebuilt title if it passes inspection and is deemed roadworthy again.
Can You Insure a Salvage Car?
Salvage Title vs. Rebuilt Title
It’s important to understand the difference between insuring a salvage car and insuring a rebuilt car:
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Salvage cars (those with a salvage title) typically cannot be driven or insured for on-road use.
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Rebuilt cars (previously salvage, now repaired and inspected) can often be insured, although with limitations.
So, you cannot insure a car that still has a salvage title for traditional use. The car must first be repaired, inspected by a state agency, and issued a rebuilt or reconstructed title before it becomes eligible for most types of insurance.
Steps to Insure a Rebuilt (Formerly Salvage) Car
Once your salvage car has been repaired and passed inspection to become a rebuilt vehicle, you can begin the insurance process. Here’s how:
1. Repair the Vehicle Completely
The vehicle must be fully repaired before it can be inspected. This includes:
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Bodywork
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Frame alignment (if needed)
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Electrical systems
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Safety features like airbags and seatbelts
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Engine and transmission systems
Keep detailed receipts, before-and-after photos, and parts lists. This documentation will be essential later.
2. Pass a State Inspection
Each state has different rules for inspecting rebuilt vehicles. Most states require:
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Submission of receipts for parts
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Photographic evidence of damage and repairs
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A physical inspection by a licensed official or department of motor vehicles (DMV)
Passing the inspection allows the car to be legally driven and re-titled as a rebuilt vehicle.
3. Get a Rebuilt Title
After a successful inspection, the salvage title is exchanged for a rebuilt title. This title allows the vehicle to be registered and driven legally on public roads. Once you have a rebuilt title, you can begin the process of insuring the car.
4. Shop for Insurance
Insuring a rebuilt vehicle is not the same as insuring a brand-new or clean-title car. Not all insurers provide coverage for rebuilt cars, and those who do may impose limitations. Here are the typical options:
Liability-Only Insurance
Most insurers are willing to offer liability coverage for rebuilt vehicles. This is the minimum required by law in most states and covers:
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Bodily injury to others
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Property damage to others
This does not cover damage to your own vehicle.
Comprehensive and Collision Coverage
Some insurers may offer comprehensive and collision coverage, but they often charge higher premiums or refuse full coverage altogether. If available, these coverages include:
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Collision: Damage to your vehicle in an accident
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Comprehensive: Non-accident-related damage (e.g., theft, vandalism, natural disasters)
5. Get the Vehicle Appraised
Many insurers require an independent appraisal to determine the value of a rebuilt car. Because salvage vehicles can’t be valued the same as clean-title cars, the insurer wants to assess the vehicle’s actual cash value (ACV) after repairs.
Challenges in Insuring Salvage or Rebuilt Vehicles
While possible, insuring a salvage or rebuilt car comes with some hurdles. Here’s what to expect:
1. Limited Insurance Options
Many mainstream insurers—especially large national companies—don’t cover rebuilt vehicles, or only offer liability insurance. You may need to contact smaller, regional companies or those that specialize in high-risk vehicles.
2. Higher Premiums
Rebuilt vehicles are often considered riskier due to their accident history. Even if repaired well, insurers may charge higher premiums or offer less favorable terms.
3. Lower Payouts
In the event of another accident or loss, rebuilt vehicles generally have a lower market value, so your payout will likely be less than it would be for a clean-title equivalent.
4. Stricter Documentation Requirements
Insurers may request extensive documentation to prove the car’s condition and the quality of repairs. This includes:
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Repair invoices
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Inspection reports
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Photos of the repair process
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Appraisal documents
Pros and Cons of Insuring a Salvage or Rebuilt Car
Pros
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Lower Purchase Price: Salvage or rebuilt cars are much cheaper than clean-title vehicles, sometimes up to 50% less.
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Basic Insurance Is Possible: You can usually obtain liability insurance to make the car street-legal.
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Restoring Value: If you plan to keep the car long-term, you can get years of use at a reduced upfront cost.
Cons
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Difficult to Insure Fully: Many insurers won’t offer full coverage, and those that do may have strict conditions.
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Depreciated Resale Value: These cars are hard to resell and fetch a lower price, even after repairs.
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Potential Hidden Damage: Some damage may not be visible or fully repaired, affecting safety and performance.
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Inspection Requirements: Getting the rebuilt title and passing inspections can be time-consuming and bureaucratic.
Tips for Getting the Best Insurance for a Salvage or Rebuilt Car
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Keep Meticulous Records: Save all receipts, take photos, and get written estimates. Insurers will ask for these.
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Get an Independent Appraisal: This helps you and the insurer understand the car’s true value.
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Be Honest About the Title Status: Lying or omitting facts can lead to denied claims or canceled policies.
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Compare Multiple Quotes: Shop around, especially with insurers who specialize in non-standard vehicles.
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Consider a Mechanic’s Evaluation: A professional inspection can verify the car’s safety and may reassure the insurer.
States with Strict Salvage Title Laws
Insurance and salvage laws vary widely by state. Some states, like California, Florida, and Texas, have very strict requirements for rebuilding and re-titling salvage vehicles. Others are more lenient. Always check with your local Department of Motor Vehicles (DMV) or equivalent agency for the most accurate information.
When Insuring a Salvage Car Might Make Sense
Insuring a rebuilt salvage vehicle can be a good option in several scenarios:
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You’re on a tight budget and need a low-cost car.
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You’re mechanically skilled and can make repairs yourself.
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You plan to keep the car long-term and aren’t concerned about resale value.
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You’re comfortable with only having liability insurance.
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You use the vehicle for short-distance commuting or limited use.
When to Avoid Salvage or Rebuilt Cars
In other cases, it might be better to steer clear of salvage or rebuilt vehicles:
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You need a vehicle with full coverage insurance.
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You don’t want the hassle of state inspections and paperwork.
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You rely heavily on your car and can’t afford potential reliability issues.
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You plan to sell the car within a few years.
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You want a car with higher resale value or are concerned about safety.
Final Thoughts
Insuring a salvage or rebuilt car is certainly possible—but it requires more effort, research, and documentation than insuring a standard vehicle. If you’re up for the task, it can be a way to save money and get back on the road. However, it’s essential to weigh the benefits against the risks and limitations. Be informed, stay organized, and consult with professionals when needed—especially your insurance provider.
Ultimately, the success of insuring a salvage or rebuilt car depends on how well it was repaired, what insurance you need, and which state you live in. If you can navigate those factors carefully, you can make a salvage or rebuilt car work for you—both practically and financially.