What is a salvage title and should I get a car with one?

Key points

• Cars with salvage titles are declared total losses by car insurance companies and likely can’t be driven, financed or insured unless they get upgraded to a rebuilt title status.
• The laws around salvage titles can vary from state to state, and insurance companies may have different rules, too.
• Buying a car with a salvage title can be risky, but might be a good option if you’re on a budget or a mechanic.

If you’ve completely wrecked your car in an accident and it’s deemed a total loss and not worth the money to fix, you’ll probably get a salvage title for it. It can then get sold for parts or auctioned off. We’ll explain more about salvage titles and everything you need to know.

What is a salvage title?

A salvage title is given to vehicles that have been totaled in an accident, flood, natural disaster or other major event. It’s a legal document issued by a state department of motor vehicles or similar agency after an insurance company has deemed a car a total loss.

The rules around salvage titles can vary depending on your state. Generally, in order for a car to get a salvage title, it has to be declared a “total loss” by your insurance company. Basically this means that the cost to repair the vehicle is more than it’s actually worth.

A salvage title occurs after something bad happens to your car such as:

• A car accident
• A flood damage or natural disaster
• Vandalism

Once a car’s considered a total loss it might be sold off for parts if it’s in really poor condition or sold at an auto auction as a salvage title vehicle.

Can you drive a car with a salvage title?

Well, it depends. While you may technically be able to physically drive a car with a salvage title — especially if the damage was mostly cosmetic in nature — it’s likely not legal to take it on the road.

Unlike vehicles with “clean titles,” salvage titled cars aren’t considered roadworthy until they’re repaired enough to pass safety inspections, which can vary from state to state.

Rebuilt title vs. salvage title: What’s the difference?

This is where things can get a little confusing. Although you might hear these names used interchangeably, a salvage title is actually very different from a rebuilt title. Both types of titles are legal documents given to a vehicle after it’s been totaled.

In order for a vehicle to earn a rebuilt title, it needs to be restored to a drivable condition. This doesn’t necessarily mean it needs to look pretty coming down the road, but it has to be safe enough to pass inspections.

Can you get car insurance with a salvage title?

Absolutely not. Since these cars have already been deemed unfit to drive and considered total losses by an insurance company, another insurance company isn’t likely to take on the risk. This definitely isn’t a case of someone’s trash being another’s treasure.

The only hope to get a totaled car insured is for it to be restored enough to earn rebuilt title status. But even then you’re still going to have an uphill battle since many insurance companies won’t touch a rebuilt title car with a ten-foot pole.

Insuring a car with a rebuilt title.

• Car insurance is required in almost every state. Before you buy a car with a rebuilt title, it’s a good idea to know what’s required in your state and make sure you can get the appropriate insurance coverage.
• Understand what kind of coverage you can get. If you’re lucky enough to find an insurance company willing to give you a policy for a car with a rebuilt title, you might only be able to get bare bones coverage. This means you might be able to get liability protection to satisfy requirements in your state, but the car likely won’t qualify for comprehensive coverage or collision.
• Shop around for quotes. Making sure you can get coverage before buying a car with a rebuilt title is critical. And don’t forget to ask your current insurance company if you already have car insurance for another vehicle.
• Rates might be expensive. Since not a lot of insurance companies are willing to cover cars with rebuilt titles, there’s not a ton of competition to keep rates low. Expect to pay higher premiums than you would if you were insuring a car with a “clean title.”

Pros and cons of buying a car with salvage title

If you’re considering buying a car with salvage title, here’s a few more important things to keep in mind:

• They’re generally cheaper to buy. If you’re a mechanic or know your way around cars, you might be able to get a “mechanic’s special” and do the repairs yourself. Just remember that in order for the car to be legally drivable it will need to be fixed up enough to pass safety inspections so it can get a rebuilt title.
• You won’t always know how the car got damaged. Although you might be able to use a vehicle history report to get some top-level information on what happened to the car, you might not be able to get all the dirty details.
• Financing is out of the question. Lenders may give you a loan to help finance a car with a rebuilt title, but if you’re hoping to finance a salvage title vehicle, good luck. You’ll likely need to pay cash if you want to take it home.
• Getting rid of the car may be tricky. If you bit off more than you could chew to make the car street legal, or simply just want to sell the car for quick cash, it might be difficult to find the right buyer.