How to Buy a Totaled Car From an Insurance Company: A Salvage Expert’s Guide

So, you’re thinking of buying a totaled car from an insurance company, eh? It’s not as crazy as it sounds! In essence, you’ll need to contact the insurance company that declared the vehicle a total loss, express your interest in purchasing it, and negotiate a price. Be prepared for some paperwork and a potentially unique set of regulations depending on your state. Now, let’s dive deep into the nuances of this fascinating salvage world.

Understanding the Totaled Car Landscape

Before we get into the nitty-gritty, let’s define what we’re talking about. A vehicle is declared “totaled” when the cost to repair it exceeds its pre-accident value, as determined by the insurance company. Keep in mind that this value often includes not only parts and labor, but also factors like diminished value and storage fees. Once a car is totaled, the insurance company typically takes ownership, obtaining the salvage title. This is where you come in!

The Steps to Buying a Totaled Car

Here’s a detailed breakdown of the process:

1. Identify the Vehicle: Obviously, you need to know which totaled vehicle you’re interested in. Often, insurance companies will list totaled vehicles on salvage auction sites, but sometimes the car remains at the salvage yard if it will be parted-out.

2. Contact the Insurance Company: This is your first key step. Find the relevant insurance company that took ownership of the vehicle and contact their salvage or claims department. Be direct and clear about your intention to purchase the vehicle. Be prepared to provide the Vehicle Identification Number (VIN) and any other identifying information.

3. Assess the Damage (if possible): Inspect the vehicle thoroughly. This is crucial! Understand the extent of the damage. Take photos, bring a mechanic friend if you can, and document everything. If the car is being parted out or is locked down, you may be restricted from inspecting.

4. Determine the Market Value: Research the fair market value of similar vehicles before they were damaged. Websites like Kelley Blue Book (KBB) and Edmunds are your friends. This gives you a baseline for your negotiation. Also look into the price of the parts.

5. Negotiate the Price: Based on your assessment and market research, make an offer. Remember that you are purchasing a damaged vehicle with a salvage title. It won’t be worth as much as a clean title car. Be prepared to walk away if the price isn’t right. They may need to clear it with the original owner of the vehicle.

6. Paperwork and Payment: Once you agree on a price, prepare for the paperwork. This may involve a bill of sale, transfer of ownership documents, and other legal forms. Pay attention to the details! Secure the necessary funds for the purchase and make the payment as agreed upon.

7. Transportation: Arrange for the vehicle to be transported from its current location (usually a salvage yard) to your desired location. This might require a tow truck, depending on the extent of the damage.

8. Repairs (Optional, but likely): If you intend to repair and drive the vehicle, you’ll need to get the vehicle repaired and re-certified.

9. Inspection: The vehicle may need to be inspected by the state or province authorities for verification purposes.

10. Applying for a Rebuilt Title: Now you will need to get a rebuilt title for the vehicle, if you plan on driving it.

Key Considerations Before You Buy

• Salvage Title Limitations: Remember that a salvage title has limitations. Financing and insurance can be more difficult and more expensive. Resale value will also be lower.
• State Regulations: Salvage title regulations vary significantly from state to state. Research the specific rules in your state regarding inspections, repairs, and titling.
• Repair Costs: Accurately estimate the cost of repairs. Be realistic and factor in potential unforeseen issues. Get quotes from reputable mechanics.
• Safety: Prioritize safety! Ensure all repairs are done correctly and meet safety standards.
• Why You’re Buying: Are you trying to save money, learn a trade, or get a specific part? This will affect your planning.

Frequently Asked Questions (FAQs)

1. Can anyone buy a totaled car from an insurance company?

Generally, yes. However, some insurance companies may have specific policies or restrictions. Also, some states might have requirements regarding who can purchase salvage vehicles. Salvage auctions are open to the public.

2. What are the pros and cons of buying a totaled car?

Pros: Lower purchase price, potential for profit if repaired and sold, opportunity for learning (if you’re doing the repairs yourself). Cons: Difficult to finance, higher insurance costs, lower resale value, potential for hidden damage, complex paperwork and regulations.

3. How do I find totaled cars for sale?

Contact insurance companies directly, or search salvage auctions (like Copart and Insurance Auto Auctions – IAA). Websites that specialize in selling salvage vehicles are also available.

4. What kind of title will the car have?

Initially, it will have a salvage title. Once repaired and inspected (if required by your state), you can apply for a rebuilt title.

5. Can I insure a car with a salvage title?

Yes, but it might be more challenging and expensive. Some insurance companies might not offer comprehensive or collision coverage on vehicles with salvage titles until they have a rebuilt title.

6. How much should I offer for a totaled car?

This depends on the extent of the damage, the market value of the vehicle before the accident, and the estimated repair costs. A good starting point is 20-40% of the pre-accident value, but be prepared to negotiate. Also, look at what the car would sell for if it were parted-out.

7. What if I only want parts from the totaled car?

You can purchase the vehicle and dismantle it for parts. In some cases, you may be able to purchase parts directly from the salvage yard or insurance company, but they don’t like doing this.

8. Is it legal to drive a car with a salvage title?

No. You cannot legally drive a vehicle with a salvage title on public roads. You must first repair the vehicle, pass any required inspections, and obtain a rebuilt title.

9. What does “bill of sale” mean?

A bill of sale is a legal document that confirms the transfer of ownership of the vehicle from the insurance company to you. It typically includes the vehicle’s VIN, the sale price, and the date of the transaction.

10. What kind of inspections are required to get a rebuilt title?

Inspection requirements vary by state. Typically, the inspection will verify that the vehicle has been properly repaired and meets safety standards. Some states may require receipts for all parts used in the repair.

11. How long does it take to get a rebuilt title?

The timeframe can vary depending on the state and the complexity of the process. It can take anywhere from a few weeks to several months.

12. Can I export a totaled car after buying it from an insurance company?

Yes, exporting a totaled car is possible, but you’ll need to comply with export regulations and the import regulations of the destination country. This can be a complex process, so consult with an expert in international shipping and customs.

Final Thoughts

Buying a totaled car from an insurance company can be a rewarding venture, but it requires careful planning, due diligence, and a bit of risk tolerance. Make sure you do your research, understand the regulations in your state, and accurately assess the costs involved. Good luck and happy salvaging!