subject: Auto Insurance on Salvaged Vehicles [print this page] Auto Insurance on Salvaged Vehicles
In California there are countless vehicles on the road with a salvaged vehicle title. A vehicle with a salvaged title is one that has been involved in an accident or been stolen and the damages to the vehicle exceeded the value. An example of this would be a damaged vehicle with a repair estimate of $4,000.00 that the insurance company is valuing at $3000.00. In this case the estimated repair cost exceeds the replacement cost. This vehicle would have a salvaged title. If the insurance company could replace this vehicle for $3,000 then it would not be in their best interest to pay to have the vehicle repaired. Once a vehicle is deemed salvaged it will always have a salvaged status.
Salvaged vehicles are often sent to auctions or to wrecking yards to be sold for parts. Many times they are purchased from the wrecking yard and then repaired with used parts. Once the vehicle is considered repaired it can undergo a brake, light and safety inspections and be registered to be driven again. The new title that is issued for the vehicle will be stamped as salvaged.
Many times after these vehicles are repaired they are sold to the general public. These vehicles are sold for 30-50% less than vehicles with clean titles. Although the consumer gets a discounted price on a salvaged car, there will unfortunately be problems insuring this vehicle. Many insurance companies will not insure a salvaged vehicle for physical damage protection. Other companies will not even insure salvaged vehicles for basic liability.
Insurance companies that do not insure these vehicles for any type of coverage generally have concerns with the roadworthiness of the vehicle itself. If the repairs were not done correctly, the existing damage could actually be the cause of an accident. This increases the exposure to the company and the likelihood that they would pay out for an accident. The main concern with insuring these vehicles for physical damage coverage is that the value is significantly less than clean title vehicles. If the insured were involved in a total loss of their vehicle it would be hard to determine the true fair market value of the vehicle. There are not enough of these vehicles on the road to make a determination based upon the year, make, model, and quality.
Consumers in the market for a car purchase should get auto insurance quotes prior to purchasing a salvaged vehicle. The lack of company selection could cause the insured to pay significantly more for their insurance. The higher insurance premium could offset the initial savings of a lower purchase price.
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