Can you get comprehensive and collision coverage on a vehicle that had a salvaged title?
We were recently asked by a customer why they could not have comprehensive and collision coverage on a vehicle that had a salvaged title.
Well a salvaged title means that the vehicle has already been totaled by an auto insurance company and that someone bought it back for the scrap or the salvage value.
After a vehicle is deemed to be a total loss by an auto insurance company, they give the insured the option to purchase the car back from them for the "salvage value". This is the amount of money the insurance company would receive from a salvage yard for the vehicle if they take title of the car.
When this happens, most states require that the title of the vehicle that has been involved in a total loss must be marked as a "salvaged title".
This lets a potential buyer of the vehicle know that the car was involved in a total loss. This process is a very important for consumer protection as we have seen cases after major storm events, like Hurricanes Harvey and Irma as well as Superstorm Sandy a few years back, where folks tried to repair the flooded vehicles and try to sell them as regular used cars.
Now back to the question, why can you not get physical damage coverage on the salvaged vehicle?
Since the vehicle has once been totaled the insurance carriers are usually not willing to offer physical damage coverage again on that vehicle.
One reason is that the insurance companies do not want to be trying to determine what was repaired, what was not repaired, what the vehicle was prior to the loss before the salvage or after the salvage and the repairs were made.
Another reason, believe it or not, is that would open the door to insurance fraud. People have purchased damaged vehicles, insured them, and then try to collect insurance money for the damages that were already on the vehicle. So, by not offering physical damage coverage on the salvaged vehicles, the companies do reduce their risk for insurance fraud.
So unfortunately, if you buy a vehicle with a salvaged title you will most likely not be able to obtain comprehensive or collision coverage for that vehicle on your auto insurance policy.
This is something to keep in mind when you are purchasing vehicles just so that you know that what you're going to be limited to is just going to be liability coverage.
If you have any additional questions about personal auto insurance coverage, please reach out to my team here at Huff Insurance. We want to earn your business.