Does a ‘Total Loss' Car Have any Value?

October 24, 2024

Has your car been damaged in a major accident or a natural disaster like a flood? Your insurance company could determine that the cost of repairing your car exceeds its actual value.

When this happens, your car is a "total loss" or a "write-off." Typically, after an insurance company states that your car is a total loss, the car is given a salvage title. What does that mean and what happens next?

Does the ‘total-loss’ car have any value?

A salvage vehicle still has some potential value.

It may be sold at auction for parts, or for recycling, or to someone who wants to repair the vehicle. You also have the option of getting the necessary repairs done yourself in order to make the vehicle roadworthy again.

What does the salvage title mean?

A salvage title or salvage branding serves as a warning to future buyers that the car has been significantly damaged and rebuilt.

If you want to change the brand status of a vehicle, you’ll need to repair the vehicle and have it inspected according to local regulations. This changes the branding from salvage to rebuilt. It can be more expensive to repair the vehicle than the value of the car.

Does car insurance cover a salvage vehicle?

A salvage-title car can have a significant impact on your car insurance premium. This type of vehicle carries more risk to insure than vehicles that do not have the status of a salvage vehicle.

There may be hidden defects or safety issues that have been overlooked that could lead to an accident or other problem. A salvage car may also be more susceptible to further damage if the structural or mechanical integrity has been compromised.

The value of a salvage/rebuilt vehicle is much less than that of a new one, which means the insurer might decline coverage as there’s no value in insuring the vehicle.

Liability coverage

If you only have liability insurance, which covers damages you cause to other people and their property in an accident, then your policy likely won't cover damage to your own salvage vehicle. Liability insurance doesn't typically extend to cover your own vehicle's repairs or replacement.

Collision coverage

Collision coverage covers damage to your vehicle caused by a collision with another vehicle or object, regardless of fault. Some insurance companies may offer collision coverage for salvage vehicles, but it's essential to check your policy and discuss your options with your insurer.

Comprehensive coverage

Comprehensive coverage protects your vehicle from non-collision-related damages, such as theft, vandalism, fire, or natural disasters. Whether comprehensive coverage extends to salvage vehicles varies among insurance companies. Some may offer limited coverage or require additional conditions, so it's important to review your policy carefully.

Specialized insurance

Some insurers specialize in covering salvage vehicles and offer specific policies tailored to their unique needs. These policies may include coverage for repairs, theft, and even diminished value. If you own a salvage vehicle, it's worth exploring these specialized insurance options to ensure adequate protection.

Before purchasing or insuring a salvage vehicle, there are several factors to consider:

Safety

Even if a salvage vehicle has been repaired, there's no guarantee that it meets safety standards or performs reliably. Always prioritize safety when considering buying or insuring a salvage vehicle.

Resale value

A salvage title can significantly diminish a vehicle's resale value, making it harder to sell in the future. Keep this in mind if you plan to sell or trade in the vehicle down the line.

Inspection requirements

Depending on your state's regulations, a salvage vehicle may need to undergo a thorough inspection before it can be registered and driven legally. Factor in the cost and feasibility of these inspections when budgeting for repairs.

Insurance costs

Insuring a salvage vehicle may be more expensive than insuring a comparable non-salvage vehicle due to the perceived higher risk. Obtain quotes from multiple insurers to find the best coverage at the most competitive rates.

Owning and insuring a salvage vehicle requires careful consideration and due diligence. By understanding the implications of a salvage title and how such a vehicle can be insured, you can make an informed decision that aligns with your needs as a vehicle owner.