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When buying used car, there is an option of choosing a car with a salvage title and drive it on the road. However, as it is required for other regular vehicles, you will need to keep a valid auto insurance whether it is a salvage title car or not. There is a growing debate over this subject of buying such vehicles and many different opinions are out there surrounding the best practices for dealing with them, including insurance policy.
What Is a Salvage Title?
A salvage title or rebuilt title is applied to a used vehicle when it has been previously damaged due to any of the following reasons:
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Collision
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Fire damage
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Flooding
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Other major calamities
The standards for damage at a certain percentage of the car’s value will be set by most insurance companies. Each state has different requirements for salvage titles, but generally any vehicle is required to be re-titled, if it was branded as rebuilt. That way, salvage vehicle title will mark that the specific vehicle was previously refurbished.
Because of a difference on each state’s standards, it is hard to find out how to make sure and drive any particular vehicle with that title. In Michigan, the state police need to sign on the salvage vehicles. Moreover, due to its umbrella term, buyers are having hard time to find out why the salvage was applied to the vehicle title, and the detailed history of the car. How can anyone tell if the car has been wrecked, salvaged from the water, stolen and broken, etc?
Auto Coverage Problems
Most auto insurance companies are reluctant to cover salvage title car due to high wariness on such car and the difficulty to set the proper value on them. Even Kelly’s Blue Book doesn’t provide any specific values for salvage title vehicles. Somehow the overall value of such refurbished vehicles is in between mystery, therefore it is not easy to secure and determine appropriate auto insurance coverage.
Auto Insurance Premiums vs. Claim Payments
Another problem with salvage title cars is about getting regular premium rates and claiming when the problem occurs. Drivers might encounter difficulty later on in case of a claim because there might be a difference between actual claim payment and what they expected. If you had not communicated well enough, the auto insurer might have calculated premiums according to Blue Book value, but when it comes to claim calculation, it is almost worthless due to its prior damage and thus the final payment is so low.
Best practice
Therefore, as a driver it is always best to be upfront with your insurer in the first place regarding your vehicle condition, and you can prevent any hassle or problem when it comes to claim situation. If you are planning to obtain auto insurance on a salvaged vehicle, you would need to make sure that the insurance company has agreed to a specific car value in writing. If they don’t want to agree on the claim payment, you should be able to lower the premium rates due to their inability to cover your vehicle properly. It will be all about speaking to the representative up front, before the final deal is made and signed off.
By keeping above tips in mind, drivers with salvage title car may be able to save on their auto insurance policy.
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