BY SOLO INSURANCE®

You found a really good deal on a car but it says “Salvage” on the title? What should you know? Car Insurance 411 by Solo Insurance® can help you understand.

Salvage Title, What is it?

Understand that a vehicle title provides much information. When noted as salvaged, the title indicates a total loss has happened. Insurance companies declare vehicles a total loss due to accidents, floods, theft recovery, etc. Once declared “totaled,” vehicles may qualify for a salvage title.

This brings the question, what is a total loss? According to Kelley Blue Book, “insurance companies ‘total’ a car when the cost to repair the damage exceeds the vehicle’s book value at the time of the incident.” So, as a rule of thumb, a total loss is when repair costs exceed a car’s book value. It may or may not be deemed unsafe to drive even after repairs, so learn why it was salvaged. In other words, something major has happened to the vehicle.  The vehicle no longer has monetary value since all the value has already been paid out in a claim. As an example, if repairs cost $12,000 but the car’s value is $10,000, it is a total loss.

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Car Insurance and Salvage Titles

Regardless of reason, totaled or salvage vehicles have no value to a car insurance company. A company has already paid out any monetary value of the vehicle to someone. Consequently, you would not put “full coverage” on it. In fact, most auto insurance companies won’t permit physical damage coverage (“full coverage”) on salvage vehicles. Also, banks and lending institutions typically won’t cover a loan on such a vehicle.

If you wonder, how do they know? A vehicle’s history is verifiable by the Vehicle Identification Number [VIN]. This means that you can look it up also. Do your homework.

Salvaged vehicle, to buy or not?

Bottom line, whether you should buy a salvaged vehicle or not depends on your circumstances and the vehicle’s. Learn why it was salvaged. Sometimes, it’s mostly cosmetic but often it’s more.

If you’re on a tight budget, you know cars, or the car’s history a salvage vehicle could be a good choice and save you money. It could also be a terrible choice and end up costing more. As with anything, buyer be wary and do your research. Just don’t expect to put anything more than liability on it, from a car insurance perspective.

So that’s the snapshot look at car insurance 411 on salvage vehicles. Stay tuned for other car insurance topics from Solo Insurance®.

Car Insurance 411 offers quick bits of information regarding car insurance terms to help you be in the know; brought to you by Solo Insurance®.
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