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What Does a Salvage Title Mean for Car Insurance?

When a vehicle has a salvage title, the car was involved in a car insurance claim in which the vehicle was totaled. When a vehicle is deemed totaled after an accident, it's because the cost of the vehicle's repairs would exceed the actual cash value of the car; therefore, the insurance company pays the vehicle's actual cash value to its owner. In most cases, car owners will sign the title over to the insurance company in exchange for their claim payment. But when the vehicle owner decides to keep the vehicle instead of turning it over to their insurance company, the title of the vehicle is stamped "Salvage" and returned to the owner along with a check for the actual cash value of the vehicle minus whatever amount the insurance company had estimated it would be able to recover by auctioning the vehicle to a salvage yard or someone who rebuilds vehicles.

A salvage title car is considered worth very little even if it is fixed after the accident it was involved in. In the State of Texas, a salvage title car must be restored/rebuilt, inspected, and have its title modified to a rebuilt title before you can legally drive it on the road.

What is a Rebuilt Vehicle?

A rebuilt vehicle is a car that was deemed a total loss by an insurance company but was then repaired. For a salvage title car to receive a rebuilt title, the damage from the claim the car was in has to be repaired. The car must also pass safety and anti-theft inspections and meet other state mandates issued by the State of Texas before receiving a rebuilt title, making the car eligible for liability insurance once again or potentially for comprehensive and collision coverages, depending on your auto insurance company.

Can You Buy Liability Insurance For a Salvage Title Car in Texas?

You cannot purchase liability insurance for a salvage vehicle in Texas unless it is a rebuilt salvage title car, meaning it was repaired after the accident it was totaled in and inspected by the State of Texas.

Not all car insurance companies will cover rebuilt salvage title cars for comprehensive and collision coverage. Before you purchase a car, you must consult with your insurance agent or company to ensure the coverage you need is available.

Is it Worth it to Insure a Salvage Title Car?

Buying a salvage title car is not always a good investment because it isn't worth as much as a vehicle just like it that was not involved in a total loss accident. To determine if a salvage vehicle is worth buying, you will need to determine whether you want to sell the vehicle for parts or repair it so the car is eligible for liability coverage again. If you plan to repair the salvage vehicle or if the vehicle has already been rebuilt and gained a rebuilt title, it is important to have a reputable mechanic that you trust inspect the vehicle before you agree to purchase it so that you can be assured the vehicle is safe to drive.

If you are buying a car with a rebuilt title, you should have the vehicle's value appraised beforehand so that you are not paying more than it is actually worth. You may also have to produce the appraisal to your auto insurer if you are trying to purchase comprehensive and collision coverages on the car.

Salvage Title FAQs

Q: Can you drive a car with a salvage title in Texas?

A: You can drive a car with a salvage title in Texas if the vehicle has been rebuilt and inspected and the salvage vehicle has been replaced with a rebuilt salvage title. Unless you have the car rebuilt and inspected, it is not legal for road use.

Q: How do I get a salvage title cleared in the State of Texas?

A: A salvage car will always have a salvage title or a version of a salvage title called a rebuilt salvage car title if you have the policy rebuilt and inspected by the State of Texas. You can never have a clean vehicle title on this type of car again.

Q: Why do people avoid salvage title cars?

A: A salvage title car is considered worth very little even if it is fixed after the accident it was involved in. If you can get a loan on a rebuilt salvage vehicle, you must carry comprehensive coverage and collision coverage, which is hard to come by on a rebuilt salvage title vehicle.