Insurance Options for Salvaged Vehicles
You might find a great used car at a cheap price, only to discover that it was, in the past, totaled. This results in the vehicle being awarded (wink wink) what’s called a “salvage title.” In Texas, cars get a salvage title if the repair costs (not including repainting) are more than the vehicle’s Blue Book value before the accident. But will you be able to get insurance on such a specimen?
Though many insurers refuse to deal with salvage title vehicles, some are willing to do so. Just be ready for higher rates and lower payouts in the event of a claim. Usually, not much is covered beyond liability. Insurance companies may be willing, however, to take into account the functionality of the vehicle and what caused it to be classified as salvage. If they determine it functions well, they will likely work with it.
The most common coverage for salvaged vehicles is PLPD (Personal Liability and Property Damage) insurance. Insurance companies don’t want to run the risk of having to cover hidden previous damage, so getting more coverage, such as physical 486damage coverage, can be tough.
If you are determined to get physical damage coverage, you need to prove that the vehicle is in roadworthy operational condition via a detailed mechanical inspection. Someone from the insurance company will also likely have to inspect it to confirm your findings.
If you pay for something like collision coverage, keep in mind that you only get 80% of your vehicle’s market value if you total your car. So if your vehicle is worth very little, you may be paying more for this coverage than you’d end up getting in the event of a crash.
Is buying and insuring a vehicle with a salvage title a good idea?
A totaled car costs less to buy but will often have a higher rate of insurance, so it’s up to you to decide if it’s worth it based on your specific situation. Cars can be marked as salvage for a variety of reasons, and may run relatively fine.
For example, if the backseat of a vehicle was destroyed by a cigarette fire, the vehicle may be marked as salvage even though all its mechanics still work. Because getting a salvage title in Texas is based on the car’s value before the accident, older vehicles that are not worth much can get a salvage declaration even if they are not too badly damaged and have full ability to return to the road.
If the car has little value but you really want to drive it, it may be best to stick with the minimal insurance that you need for a legal driving, as otherwise the insurance costs would likely end up being more than the car’s value and resultant insurance claim payout.