Your current insurance company may refuse to insure a car with a salvage title (a totaled car). However some companies agree to do this. What should you expect in terms of rates? In terms of risks? Who will cover them? Read on for the answers and a step-by-step instruction.
What does a salvage title mean?
If a car gets a salvage title, this means that it was damaged greatly, that is 75% or even more. However particular requirements vary by state. For instance, in Florida, car is considered totaled if repairs cost more than 80% of its value in prime condition. In Minnesota laws are different: vehicle has to be declared "repairable total loss" by an insurer, and there are two more conditions: it should have been worth not less than $5,000 before the accident or be no older than 6 years.
And what about Texas? There is no set percentage of damage in this state. Cars get salvage title in Texas in case repair costs (without repainting) are more than vehicle’s blue book value before the accident. It is for insurance companies to make this decision. Typically older vehicles are considered salvaged even in case when they are damaged not that much and could return to the road.
Buying salvaged cars
These tips will help you to avoid problems and will give you an advantage over an average consumer:
- realize the exact damage. It’s hard to know what is truly in any car’s history;
- determine this car’s insurability and resale value;
- ask a good mechanic to inspect it;
- you should have car title history report as well as history of maintenance records.
Don’t forget to check title's history before you buy a car in Texas. A new title can be issued in case vehicles have been left with unpaid repairs for more than a month and afterwards were sold by mechanics.
Frauds with salvaged vehicles are not rare. Some sellers clear cars off this status over the course of multiple transactions across different states. Musty odor or water stains inside any car may show that it has been in a flood, even if your dealer hasn’t warned you about it.
What if your car is considered totaled?
After major accidents some people take responsibility for the repairs. However the majority would just leave their vehicle to their insurance company. And what does an insurer do with it? There can be several decisions depending on the extent of damage:
- sell the engine (if it’s only the body that is damaged);
- distribute this vehicle for parts;
- this car is repaired and sold again;
- it is sold as it is, and thus someone else repairs it himself.
Insuring cars with a salvage title in Texas
Lack of coverage is what make some buyers avoid salvage title cars. Many insurers just do not deal with vehicles of this type, which can be really disappointing. But still there are ways to find coverage.
Be prepared for two problems:
- higher rates;
- insurance companies usually do not pay much in case of a claim (because this car is not worth much). Typically insurers do not offer more than liability coverage. So in case you were going to purchase comprehensive car insurance, you will have to spend much time shopping around.
One more point. Are you going to repair your salvage title car? If you do, value will still be considered the same as after the accident. There are, however, exceptions. For example, classic vehicles appraised by an expert. Once this is done by a professional hired by you, your insurer will send its own appraiser. Your vehicle will get special plates saying it is a restored classic.
Sometimes even non-classic restored vehicles are considered for additional appraisal, but this is not very common.
- Hire a qualified appraiser to determine actual value. This is a key step that will help your insurer know the car’s value, which normally is less than 60% of its Kelley blue book value.
- Your vehicle's safety features should be examined by a good mechanic. He will decide how roadworthy it is. It will be easier for your insurance agent to understand your vehicle's safety rating if he has reliable information on this topic.
- Consider the inspection that is offered by Texas Department of Motor Vehicles. In this case your car may be viewed favorably by insurers.
- Having done all this, submit the results to your insurer.
What type of insurance is preferable?
PLPD insurance (stands for Personal Liability and Property Damage) is the type of coverage most commonly purchased for salvaged vehicles.
And what about increasing coverage? Those who have fully restored a car or have bought a fully restored one, almost always think about protecting it with physical damage coverage. It is possible to get it, however be prepared to encounter difficulties. Many insurers never sell this type of coverage for a salvage title car in spite of the fact that this vehicle has been fully restored. One of the reasons is that it is not that easy to know the exact damage, and insurance companies do not want to cover previous damage.
If you still consider getting physical damage coverage check whether your car meets these requirements:
- it should be in roadworthy operational condition, and that should be proved by a detailed mechanical inspection;
- an appraiser from your insurance company will make an on sight physical damage inspection;
- in case your car passes this inspection you should make snapshots showing it from multiple views.
Tips and warnings for insuring a salvage title in Texas
Laws vary by state. In some places you are allowed not to have coverage while the car is being rebuilt, but many states require every vehicle to have at least the cheapest coverage.
Shopping around has never been so useful as in this case. Most insurance companies have higher rates for totaled cars in spite of the fact that they cost less.
If you are going to rebuild a car never buy one with a "nonrepairable" title. Such status means that this car can only be sold for parts (decision of Texas Department of Transportation).
Think twice before you increase insurance for salvaged cars. Bearing in mind all the difficulties, you may inevitably ask yourself whether it makes sense at all. May be it is better to leave the car with the bare minimum coverage required to be driving legally – nothing more? You can’t answer just “yes” or “no”. Consider the value: if this car costs very little, putting physical damage on it doesn’t make sense.
One more type of insurance you may consider is collision coverage. Before you take any steps in this direction, remember that in case of an accident, even if you really total your salvage-title car, you get only 80% of this vehicle’s market value.