Gianetta Palmer is a writer for CarInsurance101.com, copywriter, and essayist. Her work has appeared in EverydayHealth.com, Healthline, and The Dyrt Magazine. She is the author of Scrunchie-Fried and writes a lot about car insurance in her spare time.

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Aug 24, 2020

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Just What's Essential

  • Insurance companies generally sell salvaged cars through auto auctions.
  • Auto salvage auctions are held either in-person or online.
  • When a car is deemed a total loss, its title is rewritten as a salvage title.
  • Totaled vehicles have repairs that cost more than a certain percentage of the cars value.

If you are interested in buying a salvaged vehicle, it’s important to educate yourself on how to buy cars direct from insurance companies.

Whenever a vehicle is deemed economically unrepairable, the insurance company will consider it a total loss. When this happens, the insurer will pay the vehicle’s owner for the value of the car.

The insured can then choose between giving up the vehicle or retaining the salvage rights and buying the car back from the insurer at a fraction of its original value.

If the insured chooses not to retain the vehicle’s salvage rights, the insurance company takes the vehicle away and brings it to a lot where it can be sold. In many cases, these vehicles are nothing more than scrap metal.

Some people may be able to salvage parts from them to aid in repairs for other projects. Other vehicles, however, are still perfectly functional, and they may offer a good value for buyers. This may seem confusing, but it’s car insurance 101.

Read on for more information on how to buy cars from insurance companies. If you’d like to compare free car insurance quotes available in your area, just enter your ZIP code in the box above.

How to Buy a Car From an Insurance Company

Are you wondering how to buy damaged or salvage cars direct from insurance companies?

Insurance companies generally do not sell totaled cars directly. Instead, they offer insurance salvage cars for sale through auto auctions. These are often the same auctions where cars that have been repossessed, impounded, or abandoned are sold.

The auctions happen regularly and are usually hosted by companies like Salvage Direct; you can find a nearby auction by searching online or calling tow yards. They will sometimes have ads saying there are accident and damaged cars for sale.

Once you’ve found the time and place of an auction, you should be able to do some research on the vehicles involved.

There should be an explanation of the vehicles up for sale, their conditions, and how they came to be in the auction. There will also be explanations of any limitations placed on participants.

For example, in some states, only people within the auto industry can buy a salvaged vehicle, while other states allow all individuals to buy one.

If you don’t have a business or dealer’s license you may be wondering, “How can I buy cars at auction without a license?” While some auctions require these licenses, not all do. So, “do you need a license to buy salvage cars?” In some cases, yes.

If possible, take a look at the vehicles you’ll be bidding on.

You might not be able to test-drive them as you would another used car, but you may be able to inspect it for frame damage, check for leaking fluids, or otherwise get an idea of what shape the vehicle is in. In other cases, this may not be possible and you might be buying the vehicle essentially blind.

Here’s a video with some quick tips on buying autos at an auction.

Some auctions are completed online, so you don’t even have to come to the yard to buy a vehicle. While this option is convenient, it does mean that you’re buying the car sight unseen and could end up with something worse than you’d imagined.

A reputable auction company will provide records of where the vehicles came from and what damages they have, but even then the car may not be what you’re expecting.

Once you get the car, be sure to examine it thoroughly and have a mechanic look it over to assess the damages and determine whether the car is safe to drive. If the car is not operable, you may need to resell it for scrap and could lose money on the purchase. Shopping this way is always a gamble.

If you’re car-savvy or know someone who is, exploring these auction cars can be a great way to get a low-price vehicle. You can use this car as a daily driver, a first car for a teenager, or as a restoration project. The vehicle may not be pretty, but it can be functional and should come at an excellent value.

So, those wondering, “How do I buy a car from my insurance company?” will usually get the best answer from the insurance companies themselves.

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What is a salvage title?

When a car is deemed a total loss, its title is rewritten as a salvage title. What is a rebuilt or salvage car title? It’s when the vehicle no longer carries its original value and cannot be insured at the same value as other cars of that same make and model. In other words, since the owner was already paid for the value of the vehicle, it cannot be totaled out again.

Because of this, salvaged vehicles generally cannot be insured with full coverage insurance. There may be some exceptions, such as a fully-restored collector’s car, but most cars with salvage titles can be insured only with a basic liability policy.

In addition to insurance limitations, a salvage title serves as a warning to possible buyers that the car has sustained damage before.

Even if the car is extensively rebuilt, it will retain the salvage title. The vehicle is no longer worth what it once was and cannot be sold for that amount, so the salvage title is a form of protection for potential buyers.

A car that has never been totaled is said to have a “clean title.”

If you’re willing to take a risk on buying a salvaged auto, you can find cars in good shape for a very low price. Buying a salvaged vehicle is especially attractive if you’re familiar with vehicle repairs and maintenance and are able to rebuild it yourself.

How can a totaled vehicle be operable?

Totaled vehicles have repairs that cost more than a certain percentage of the car’s original value, known as a “total-loss threshold.” This threshold differs from state to state.

For example, Tennessee’s repair threshold is 75 percent, which means, cars that need repairs costing more than 75 percent of the vehicle’s original value would be considered totaled. Check out the chart below for information on your state’s threshold.

Vehicle Total Loss Thresholds by State
StatesTotal Loss Thresholds
Alabama75%
AlaskaTLF
ArizonaTLF
Arkansas70%
CaliforniaTLF
Colorado100%
ConnecticutTLF
DelawareTLF
Florida80%
GeorgiaTLF
HawaiiTLF
IdahoTLF
IllinoisTLF
Indiana70%
Iowa50%
Kansas75%
Kentucky75%
Louisiana75%
MaineTLF
Maryland75%
MassachusettsTLF
Michigan 75%
Minnesota 70%
MississippiTLF
Missouri80%
MontanaTLF
Nebraska75%
Nevada65%
New Hampshire75%
New JerseyTLF
New MexicoTLF
New York75%
North Carolina 75%
North Dakota75%
OhioTLF
Oklahoma60%
Oregon80%
PennsylvaniaTLF
Rhode IslandTLF
South Carolina75%
South DakotaTLF
Tennessee75%
Texas100%
UtahTLF
VermontTLF
Virginia75%
WashingtonTLF
West Virginia75%
Wisconson70%
Wyoming75%
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Before you begin searching for insurance salvage cars for sale, it’s important to know how vehicles that have been in accidents can still work. When you think “total loss,” you might imagine a heap of twisted metal. While some totaled vehicles are obviously unrepairable, many more are totaled because they are simply not economical to fix.

This happens often with older vehicles that may only be worth a few thousand dollars. In some cases, the repairs the vehicle requires are entirely cosmetic, but repairing it would still cost more than the car is worth. Again, each state has its own total loss values.

These pricey cosmetic damages may be as simple as small dents, paint scratches, or other minor issues.

Vehicles that have been damaged by hail or vandalism may be totaled despite being operable. Because the vehicle has been deemed a total loss, it must be sold on a salvage title, which will make the vehicle much more affordable to buy.

How do I find out the total loss on my car insurance policy? Car insurance companies calculate a car’s total loss settlement based on its actual cash value.

How much will a salvaged car cost?

Because these salvaged cars are bought at auction, the price fluctuates depending on demand and who is bidding. As a rule, a car with a salvage title is worth about a quarter of its list price.

So, for example, if a car’s Kelly Blue Book value is around $2,000, you might be able to buy it on salvage for $500. This vast price deduction is why some people opt to buy a salvage vehicle as opposed to a used vehicle.

Determining the repairs needed on the salvage vehicle should be done before purchasing, as the repairs could end up costing more than the vehicle itself.

Are you wondering, “How do you buy cars at wholesale auctions?” The best way to buy a car from an auction is to set aside the amount of money that you’re willing to spend and bring it with you in cash whenever possible. This way, you won’t be tempted to go over your budget and you’ll know when to bow out of bidding.

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Can you buy salvage cars without bidding?

Insurance companies will mostly put salvage vehicles up for auction, so bidding is one of the most frequent ways to buy a salvage car, though there are other options. A quick internet search for “salvage car dealers” or “salvage cars for sale” will give you a list of salvage vehicle dealers in your area.

Websites like salvagezone, Copart, and Dashub are great places to find salvage cars online. However, when purchasing a salvage car online, it’s probably a good idea to find a vehicle within driving distance of your area. That way, you can go see the car yourself and possibly get it looked at by a mechanic.

Online Auctions vs. In-Person Auctions

Online auctions and in-person auctions are very different from one another. Each option has its own benefits and disadvantages. It’s important to consider both when searching for a salvage title car to purchase.

Probably the largest benefit to in-person auctions is that you can see and do a brief inspection of the car yourself. You can get a full look at the vehicle and won’t be surprised by any damage. There are usually fewer people bidding at an in-person auction than online, so you’re more likely to get a good price.

One of the biggest benefits of bidding for salvage cars online is that you can do all your bidding from the comfort of your own home.

When bidding for cars online, you can place bids whenever you want, instead of having to attend an already scheduled auction.

Also, you’ll likely find many more choices when searching for salvage cars online. Many auction websites and auto auction malls will provide in-depth information on each car they offer, which can give you as much information as going to see the car in person.

Getting Insurance on Salvage Cars

Most insurance companies won’t offer full coverage plans on salvage cars. Some companies flat out won’t insure salvage cars, but there are some options available.

As mentioned above, there are car insurance companies out there that, instead of offering full coverage, offer some sort of liability insurance. Collision insurance is also offered by many car insurance companies for salvage title cars.

Insurance companies’ policies on salvage automobiles and other car insurance coverage information can be found online. For example, information on both AIS home insurance and car insurance can be found on the company’s website.

Can I buy insurance for a salvage titled car? Yes, though in many cases, insurance rates will cost more for salvage title vehicles because they usually come with additional risks.

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Pros and Cons of Purchasing a Vehicle with a Salvage Title

There are plenty of reasons one may decide to buy a car with a salvage title. More often than not, salvaged vehicles are purchased for budgetary reasons. While a salvage car may look good because of the price tag, it’s important to know the cons of buying these types of vehicles.

For one, you may end up paying more for repairs than initially expected. It’s hard to tell exactly how many repairs will need to be done to the vehicle over time.

If you’re not experienced at buying vehicles at auction, it’s important to do your research beforehand.

You could end up paying too much for a vehicle that will cost you a lot of money in the long run. It may also be a good idea to bring someone you trust who is good with cars to the auction.

There is also the possibility that a vehicle bought at auction won’t pass a safety inspection, which can require even more money in repairs if you want to continue driving the vehicle. Be sure to check with your local DMV for information on safety inspections in your area.

Additionally, it will be important to check with your car insurance company before buying a salvage title car, as some will not insure those types of vehicles at all. Knowing how to buy salvage cars is important; you don’t want to end up with a money pit.

Also mentioned above, if you’re prepared to make all repairs and restore the vehicle on your own, buying a salvage title car can be an excellent project. Buying a salvage car is also an excellent option if you’re simply looking to obtain parts for another project.

Hopefully, you’ve learned more about how to buy cars direct from an insurance company. You’ll hear many different opinions on the purchasing of salvage vehicles.

Some recommend that you shouldn’t even consider buying a vehicle with a salvage title, though this may be the only option for those with budgetary restraints.

Research the vehicle thoroughly and have it looked at by a trusted mechanic. Mentioning the vehicle you’re considering purchasing to your insurance provider is probably a good idea, as well.

Now that you know more about how to buy cars from insurance companies, compare car insurance rates today by entering your ZIP code into our FREE tool below.