Can I Insure a Salvage Title Vehicle?

Insuring your vehicle can be a trying adventure. There are many considerations and coverage selections that must be completed to initiate a policy. Insuring a salvage vehicle can add tension to your policy selection. Many insurance carriers refuse to insure salvage titled vehicles due to the unknowns that are presented. However, there are insurance companies that will insure a salvaged vehicle.

What Is a Salvage Title?

• Vehicles that are totaled by their insurance companies receive salvage titles once they are sold to salvage companies for scrap. Insurance companies total vehicles when the cost to repair the vehicle exceeds at least 75 percent of the vehicle's value. These vehicles are totaled for a multitude of reasons that include, but are not limited to, severe accidents, floods, weather damage and theft. When the salvage company processes the vehicle, the company can choose to scrap the vehicle's parts or refurbish the vehicle for use. If these vehicles are refurbished, they are sold to individuals under the same salvage title. Salvage titles cannot be guaranteed for safety. However, while some salvaged vehicles are unsafe, others have proven to be quite reliable. It is important that you choose your salvaged vehicle carefully.

Acceptable Coverage

• Insurance companies provide limited coverage to salvage titled vehicles. Since salvage titled vehicles provide no safety assurances, the vehicle becomes a higher risk for these companies. The risks and dangers increase, not only for the driver of the vehicle, but for the passengers and other innocent parties. Insurance companies reduce their risks by allowing policyholders to insure these vehicles with liability-only coverages. These coverages include bodily injury and property damage coverages, as well as uninsured and underinsured motorists' coverages.

Prohibited Coverage

• Most insurance carriers prohibit the selection of physical damage coverages for these vehicles. Physical damage coverages include comprehensive and collision, which insures the vehicle's damages from fire, theft, acts of nature and fowl, and collisions with non-moving objects.

Dishonest Activity

• Authorities have uncovered insurance companies fraudulently avoiding the placement of salvage titles on totaled vehicles. This failure to title allowed these companies to sell these vehicles for far more than legally allowed. In 2005, State Farm was found guilty of allowing more than 40,000 salvage vehicles to be sold under standard titles in 49 states. The company, in turn, received court judgment to compensate the buyers of these vehicles. The history of unsafe salvage vehicles and the unscrupulous selling activity of these vehicles have captured the attention of the U.S. government.

Passenger Vehicle Loss Disclosure Act

• In June 2007, the 110th Congress introduced the Passenger Vehicle Loss Disclosure Act, which focuses on improving "consumer access to passenger vehicle loss data held by insurers." The bill requires that insurers properly title salvaged vehicles and list their information on an electronic database in a timely fashion. The database information must include the vehicle's identification number, the date the vehicle was declared to be a total loss, the odometer reading on the date of declaration and the cause of the total loss. The loss determination reasons include flood or water damage, collision or fire damage, and theft and recovery. The information must also list whether one or more airbags were deployed. As of August 2009, the Passenger Vehicle Loss Disclosure Acts was waiting for approval in the House.

 For more information regarding insuring a salvaged vehicle call 540.657.5633

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