Josh had purchased a brand-new Chevrolet Silverado fourteen years ago. He carefully maintained and kept it in great shape all these years. A couple months ago, he was broadsided in an intersection, resulting in body damage to the entire right side of his truck. Because several of the Silverado’s body parts would need to be replaced, the repair estimate came to over $5000. Unfortunately, this was enough to declare his vehicle a total loss. The insurance company valued his vehicle at $6600 and found that they could sell it for a salvage value of $650. John chose to “buy back” his vehicle and so they paid him the difference of $5950, minus his $500 deductible. This left John with just enough to complete the full repairs on his truck and make it good as new. But now, will John have trouble insuring it?
Jacky has a slightly different story. She was looking for a newer, more reliable vehicle but was having trouble finding a vehicle she liked that priced low enough to afford the payments. She had been looking at vehicles eight to ten years old when she saw a four-year-old Toyota Camry online that was within her price range. The ad said that it had a salvage title but had been fully repaired, and it looked fabulous, both online and also when she went to see it. She bought the vehicle for a steal because of the salvage title, but now will she be able to get it insured?
Insuring a vehicle with a salvage title can, indeed, be more difficult. A couple things that can make a difference is whether the damage has been fully repaired and what kind of coverage you wish to carry going forward.
In our second example above, the Camry’s damage had been fully repaired and Jacky’s loan required that she fully insure the Camry. Even so, there’s an even chance that Jacky’s current insurance company might not be willing to provide this coverage. If she finds this to be the case, Jacky may want to talk to an independent agent like me, who will likely be able to provide quotes from one or more carriers willing to fully insure it. She may be asked for proof that that the vehicle is fully repaired, such as clear photos showing the condition. So it can really vary; many carriers are not willing to offer physical damage coverage in this situation, but other carriers are.
Now let’s go back to John. He paid off his new-truck loan years ago, and it is up to him what coverage he carries going forward. If he opts to continue to fully insure his pickup, he’ll be in a similar situation as Jacky. But if he chooses to self-insure the remaining value and go with “Liability only”, his current carrier will likely be willing to provide this reduced coverage. They may still ask him for photos and/or repair receipts. It’s worth noting, however, that there are a few carriers who simply refuse to provide any coverage at all for salvage titled vehicles.
There is one thing both John and Jacky need to know if they do fully insure their vehicles. Although they won't pay any less in premium due to the salvage title, they’re not going to get book value if their vehicle is totaled again later. Without question, a vehicle with a salvage title is worth less. (It was this very blessing that made it possible for Jacky to afford her Camry in the first place.) But this lower value will be taken into account when your carrier is appraising your totaled vehicle.
In some cases, insurance proceeds from a total loss might be enough to repair the major damage but might leave some cosmetic damage unrepaired. This will likely make it harder, but not necessarily impossible, to fully insure the vehicle. If physical damage coverage is secured and then new damage occurs later, the insurance company will take into account the existing unrepaired damage in settling the claim, if either the damage is to the same parts or if they are totaling vehicle for a second time.
One other note. In Minnesota, state law does not require a salvage title for lower value vehicles more than a few years old. So a vehicle could be a prior total loss and have a normal title. If you “buy back” your vehicle after a total loss and a salvage title is not required, your current insurance company will likely treat your vehicle the same as if it had a salvage title, meaning they might or might not be willing to fully insure it again after it is repaired. However, if you buy a repaired vehicle that was totaled previously but has a normal title, you may not have any insurance issues at all.
The Josh and Jacky examples are a work of fiction and do not depict any actual specific client or situation.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.