By Lorie Ham
With the costs of repairing a damaged vehicle rising just like everything else these days, the way insurance companies handle those cars has changed. “In the not-so-distant past, vehicles were totaled by insurance companies when the damage was so bad that the car probably would never be driven again,” states Jerry Linscheid of Mennonite Insurance Services. “That mindset has changed. The cost of car repairs has skyrocketed. So, insurance companies are looking at the repair costs compared to the total they would pay for the car. As those numbers get close, it makes sense to settle the claim quickly by ‘totaling’ the car and paying the customer.”
With more of these salvage vehicles available for purchase now, should you consider buying one? What does salvage vehicle actually mean? We chatted with Mennonite Insurance agent Claudia Fletes to learn more.
Q: What is a salvage vehicle?
Claudia: An insurance company will determine when a vehicle is damaged beyond repair or the cost to repair it costs more than the vehicle is worth. In such cases, the company will pay out what the vehicle is worth at the time of loss. As a result, the vehicle is considered ‘Salvage.”
Q: Can it be driven?
Claudia: The vehicle can be driven again on public roads if it is properly repaired and passes a thorough inspection with CA Highway Patrol (this is for CA, you should check the rules for your own state).
Q: How does an insurance company decide whether to have a car repaired or replaced after an accident?
Claudia: An insurance company may determine that it is more cost effective to pay off the value of the vehicle rather than repairing the damages. With technology on vehicles getting more advanced and rising costs for parts and labor, even a minor accident may result in a salvage vehicle.
Q: Can it be sold?
Claudia: Yes, but the salvage title must or should be disclosed.
Q: Can it be insured?
Claudia: Yes. However, some companies will not allow Comprehensive or collision coverage on a salvaged vehicle.
Q: A lot of totaled cars are still on the road. What should people think about when they are considering buying a car that may be salvaged?
Claudia: Consider getting a CarFax (history report on the vehicle). Why was the vehicle salvaged? Often cars are salvaged in states where there are floods and transported to other states for sale. Consider the value of the salvage vehicle and if it is insurable with your auto insurance company. Would you feel safe driving or having your family in a salvaged vehicle? What is the value of the vehicle and can you add insurance on the vehicle? These are all things to consider if purchasing a salvage vehicle.
So why would someone consider purchasing a salvage vehicle? According to a 2023 article on Edmunds.com, the main reason seems to be price. If you are on a budget, a salvage-title car can sell for twenty to forty percent less than the same vehicle with a clean title. The article also mentions some things you should do before purchasing such a vehicle, which include having the vehicle inspected, purchasing the vehicle from a reputable repairer, asking for the original repair records, and as Claudia suggested, getting the vehicle’s history report.
If you are considering purchasing one of these vehicles, feel free to reach out to Mennonite Insurance at (559) 638-2327 and they will be happy to try to answer any questions you might have in regards to insuring such a vehicle.
