Salvage Title Insurance, Inspection, & Financing Restrictions

So you’re looking at a vehicle that has a salvage title. Maybe you’re buying a car at Copart Auto Auction or IAA, and you are gonna maybe fix that car up, maybe repair it, and you want to put it on the road. What about insurance? Is that vehicle eligible for insurance? A salvaged vehicle, when it’s completed, becomes a rebuilt title, and there are some insurance considerations that you need to take a look at. So let’s see what that process is like.

Checklist for Getting a Rebuilt Title
Here is the checklist of what you need to do to get a rebuilt title for a salvaged car. First, you have to get the vehicle inspected by a private mechanic. You want to do that first because that won’t give you the authorization to get a title from the state. But before you go to this state government inspection, you want to have a private mechanic make sure that it’s ready to go because if you go to that inspection and it fails, your next inspection will be much more intensive, and you might have to wait another month or two. Sometimes they require you to wait 60 days for a second inspection, so you want to have the vehicle checked out outside of the government system first to make sure it’s good to go.

State Inspection Requirements
Then you’re going to have to bring it for that state inspection. Different states have different criteria. Many times, however, in addition to the physical condition of the vehicle being acceptable, you also have to have documentation of the repairs. Just because, let’s say, you fixed a fender and adjusted the suspension, and the car is good to go, you have to have receipts for all your major component parts and also proof that all of the items in the original salvage claim have been rectified. Many times the state inspector will go back to that original insurance claim, which they can access through their insurance database, and see what the original repairs of the vehicle were, and they’re going to make sure that it was done properly and that you have receipts for it. If you don’t see any repairs needed to get done, it may be that it was a flood car or recovered theft, and that makes it more complicated.

Obtaining the Rebuilt Title
Once you get that inspection passed, then you get a rebuilt title from the DMV or your state titling agency.

Insurance Challenges with Rebuilt Titles
Here’s the problem: when you go to buy insurance, some insurance companies do not insure vehicles that have rebuilt titles. Even the ones that do sometimes only give you minimum liability; they don’t give you comp insurance, right? So that may be a downside to having a rebuilt title or salvage title. Make sure you know in advance what insurance is available, and if your carrier doesn’t offer it, you may have to contact a different insurance carrier. They may put limitations on your coverage, so if the vehicle is subsequently damaged, you may not be able to recover all of your losses on a salvaged vehicle.

Impact on Resale Value and Financing
This can also hurt resale value because buyers in some cases can’t get insurance. If you have a later model vehicle that would need to be financed, some finance companies also don’t finance vehicles that have a prior salvage or rebuilt history.

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