Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 26, 2020

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Key takeaways...

  • Salvage title vehicles are cars that have sustained more than 75 percent of their value in accident damage
  • Salvage vehicles can be good deals for savvy buyers
  • Insurance companies charge more to cover salvage title vehicles
  • You can find a good deal on salvage title car insurance coverage by shopping around

Buying a salvage title vehicle can result in getting a great deal and paying less than you otherwise would. Just because a car has been wrecked doesn’t mean it can’t be restored to pristine condition.

What is a rebuilt title or salvage title car? Once a vehicle has been totaled out by the insurance company, it might be re-sold and can be re-titled. You can buy a salvage title vehicle with confidence. It can affect your car insurance and what you pay for it.

Does a salvage title increase insurance? Insurance companies classify salvage title vehicles as riskier than standard title vehicles. Consequently, they charge higher rates to insure these cars, though every car insurance company is different.

Do you need insurance quotes for salvage title cars? Compare car insurance quotes today for FREE to make sure you’re paying a fair price for the coverage you need.

Read on to learn what how to choose the salvage title car insurance company for you.

Table of Contents

Do car insurance companies cover salvage title vehicles?

Can you insure a salvage title car? Can you get full coverage on a salvage title vehicle? 

You shouldn’t have trouble finding a car insurance company to insure your salvage title car. But you might have to search harder than with a standard title vehicle. The first few companies you check might have policies against insurance cars with salvage titles.

Some insurance companies provide coverage but limit what they’ll pay for. For instance, they’ll offer liability coverage but not protection against physical damage.

You’ll need to get the minimum liability requirements for your state. The table below shows what these requirements are. So whether you’re looking for salvage title car insurance in Texas or California, search for your state to see what your requirements are.

Minimum Liability Auto Insurance Requirements by State
STATEINSURANCE REQUIRED MINIMUM LIABILITY LIMITS
ALBI & PD Liab25/50/25
AKBI & PD Liab50/100/25
AZBI & PD Liab15/30/10
ARBI & PD Liab, PIP25/50/25
CABI & PD Liab15/30/5
COBI & PD Liab25/50/15
CTBI & PD Liab, UM, UIM25/50/20
DEBI & PD Liab, PIP25/50/10
DCBI & PD Liab, UM25/50/10
FLPD Liab, PIP10/20/10
GABI & PD Liab25/50/25
HIBI & PD Liab, PIP20/40/10
IDBI & PD Liab25/50/15
ILBI & PD Liab, UM, UIM25/50/20
INBI & PD Liab25/50/25
IABI & PD Liab20/40/15
KSBI & PD Liab, PIP25/50/25
KYBI & PD Liab, PIP, UM, UIM25/50/25
LABI & PD Liab15/30/25
MEBI & PD Liab, UM, UIM, Medpay50/100/25
MDBI & PD Liab, PIP, UM, UIM30/60/15
MABI & PD Liab, PIP20/40/5
MIBI & PD Liab, PIP20/40/10
MNBI & PD Liab, PIP, UM, UIM30/60/10
MSBI & PD Liab25/50/25
MOBI & PD Liab, UM25/50/25
MTBI & PD Liab25/50/20
NEBI & PD Liab, UM, UIM25/50/25
NVBI & PD Liab25/50/20
NHFR only25/50/25
NJBI & PD Liab, PIP, UM, UIM15/30/5
NMBI & PD Liab25/50/10
NYBI & PD Liab, PIP, UM, UIM25/50/10
NCBI & PD Liab, UM, UIM30/60/25
NDBI & PD Liab, PIP, UM, UIM25/50/25
OHBI & PD Liab25/50/25
OKBI & PD Liab25/50/25
ORBI & PD Liab, PIP, UM, UIM25/50/20
PABI & PD Liab, PIP15/30/5
RIBI & PD Liab25/50/25
SCBI & PD Liab, UM, UIM25/50/25
SDBI & PD Liab, UM, UIM25/50/25
TNBI & PD Liab25/50/15
TXBI & PD Liab, PIP30/60/25
UTBI & PD Liab, PIP25/65/15
VTBI & PD Liab, UM, UIM25/50/10
VABI & PD Liab, UM, UIM25/50/20
WABI & PD Liab25/50/10
WVBI & PD Liab, UM, UIM25/50/25
WIBI & PD Liab, UM, Medpay25/50/10
WYBI & PD Liab25/50/20
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The first step to getting your salvage title car insured is to determine the coverage you need. Next, review the underwriting guidelines at different companies. You should be able to find one that meets your insurance needs.

Know what salvage title car insurance companies are best in your state.

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How does a salvage title affect your car insurance premiums?

How does a salvage title affect insurance rates? Is car insurance more expensive with a salvage title?

You’ll almost always pay more to insure a salvage title vehicle than a comparable standard title vehicle. Insurance companies classify salvage title cars as high risk. This risk assignment means they believe greater chance exists they’ll have to pay a claim on these vehicles.

To compensate for their perceived higher risk, they charge more in premiums.

Insurance companies consider salvage titles risky for two main reasons. First, they can’t be sure of how safe a salvage title car is to drive. Even if the car can be restored to working order, insurers worry about the internal damage that is hard to spot in a routine inspection.

Such damage might cause the vehicle to malfunction during operation. This malfunction can result in a crash that causes damages or injuries.

The other reason has to do with valuation. When you buy collision or comprehensive coverage, your car’s value is one factor that determines how much you pay.

Expensive cars cost more to insure because the insurance company has to pay more for repairs when something happens to them.

The challenge with salvage title vehicles is they are difficult to value. Because of the history of damage, blue book values are often inaccurate.

Insurance companies often decline to provide collision or comprehensive coverage to salvage title vehicles, or they charge higher premiums to do so.

Full Coverage Versus Liability Only on Salvage Cars

One of the biggest decisions you make when buying a used car is whether to insure it with full coverage or liability only. Full coverage means liability plus comprehensive and collision. The three types of car insurance are broken down as follows:

  • Liability – this coverage pays for damages to the other vehicle and injuries to the other driver and passengers when you’re at fault in an accident.
  • Collision – this coverage pays for damage to your vehicle in an accident where you’re at fault.
  • Comprehensive – this coverage pays for damage your vehicle sustains in a non-collision situation, such as theft, vandalism, or storm damage.

Unless you live New Hampshire or Virginia, the law requires you to have liability coverage. And even if you’re in one of those states, it’s unwise to drive without it. If you cause an accident and you don’t have insurance, you’ll have to come out of pocket to pay for damages.

Imagine hitting a $60,000 car while you’re uninsured. That’s a big check to have to write. And if you can’t come up with the money — not an uncommon scenario — you can have your wages garnished or assets seized until your obligation is settled.

If you finance your vehicle purchase, the lender usually requires full coverage but since most lenders don’t finance salvage title purchases, chances are, you’re paying cash for your car. This means you can decide whether to buy comprehensive and collision coverage.

Paying for full coverage on a salvage title vehicle often isn’t worth it. For one thing, the premiums are higher for the aforementioned reasons.

For another, you won’t even receive the full salvage value of your car in the event it’s totaled. You’ll only get 80 percent. So if you total a $5,000 salvage car, you’ll only recover $4,000.

Because every situation is unique, you’ll want to run the numbers for yourself. But often with a salvage vehicle, the replacement cost you’ll receive in a total-loss accident is less than what you’ve paid in insurance premiums, even if you’ve only had the car a short time.

Standard Title Versus Salvage Title

When you buy a car, it generally has one of three title types:

  • standard
  • salvage
  • rebuilt

A standard title, also known as a “clean” title, means the vehicle hasn’t sustained significant damage in an accident. It doesn’t mean the car has never been in a fender bender or even a full-on crash. It simply means the damage sustained didn’t meet a certain threshold.

This table goes over the difference between clean, salvage, and rebuilt titles.

Types of Vehicle Titles and Their Details
TITLE TYPECOLOR OF TITLEISSUING FACTORSPROSCONS
SALVAGE TITLEBlueIssued for vehicles whose damages exceed the value of the vehicleUsually very cheap to purchaseNo insurance available, can't be driven legally, and repairs can be costly
CLEAN TITLEGreenIssued for new or used vehicles with little to no damageNo damage or repairs to deal withMost expensive upfront cost
REBUILT TITLEOrangeIssued for vehicles that were salvaged but have been repaired and passed an inspectionCheaper than a new or used car to purchaseCan be driven legally but can be hard to find more than liability insurance
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Does a salvage title affect the value of a car? What happens if insurance totals your car

If vehicle gets totaled out by a carinsurance company, it can be rebuilt and re-titled. You can buy salvage cars from an insurance company. But the industry typically estimates that salvage vehicles deduct 20 to 40 percent of their Kelley Blue Book value over a clean title.

How much does a salvage title affect value?

A salvage title signifies that a car sustained damages exceeding 75 percent of its value. So if a vehicle worth $20,000 suffers more than $15,000 in accident damages but is subsequently repaired and put back on the road, it receives a salvage title.

Many buyers turn tail and run when a vehicle they’re considering is revealed to have a salvage title but a salvage title doesn’t always indicate the car is a lemon. It can actually signify a fantastic deal to buyers who do their due diligence.

This video from Donut Media goes over salvage title cars.

Since the demand for salvage title vehicles is low, sellers are limited on what they can charge for them. But a properly repaired salvage title car can be just as reliable as a comparable vehicle with a clean title.

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Reasons Cars Have Salvage Titles

Cars get salvage titles when they sustain damage that exceeds a certain percentage of their value. There are three main reasons why this damage happens:

  • Collision – after an accident, insurance adjusters assess the damage to the vehicles involved. This damage is compared to the car’s market value at the time of the accident. If the damage exceeds 75 percent of the value, the car gets a salvage title if it is repaired.
  • Storm Damage – when a vehicle sustains damage in a storm, such as a flood or hail storm, adjusters also assign a value to repair costs. Once again, this value must exceed 75 percent of the car’s market value for a salvage title to be assigned.
  • Theft – this is a unique situation in which a car might end up with a salvage title.

How about salvage title car insurance claim settlements? If an insurance company pays a claim on a stolen vehicle and the vehicle is subsequently recovered, the insurance company can sell the car and keep the proceeds, and the car receives a salvage title.

Obtaining the Best Car Insurance Coverage

Doing two things can help you get the best car insurance coverage. Compare three to four different quotes before choosing a policy, and review your coverage every six months.

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Compare Car Insurance Quotes

Rather than going with the first quote you receive, compare three to four side by side before making a decision. The first offer isn’t always the best one. You don’t want to leave a potentially better deal on the table.

Only when you look at offers side by side can you get an accurate frame of reference to determine which offer is best.

Review Your Car Insurance Coverage

Make sure you review your car insurance every six months before renewing your coverage. Don’t assume the policy you have now is the best one going forward.

Figure out if your needs have changed over the past six months or if another company now offers a better deal. Blindly renewing your policy term after term can lead to paying more than you have to.

Salvage title vehicles aren’t always junk. They can be great deals for savvy buyers but there’s no way around the fact they affect your insurance. You’ll pay more for premiums, and your coverage might be limited.

Ready to buy salvage title car insurance?

If you do your research, you can find the right salvage title car insurance rates. Does a salvage title affect car insurance? Now that you know, enter your ZIP code below to compare car insurance quotes for FREE.

References:

  1. https://www.kbb.com/company/faq/values/