Can you insure a totaled car?

You can insure a total loss vehicle, but obtaining full coverage car insurance can be difficult, if not impossible. Companies that write car insurance policies for a vehicle with a rebuilt title or salvage title tend to offer liability only. 

The insurance company may want to do an inspection or require a statement from a mechanic saying that the car is roadworthy. 

For example, State Farm may provide a vehicle previously declared a total loss with a salvage title with comprehensive and collision coverage if the vehicle has been repaired, subject to underwriting. However, not all cars will qualify.

“State Farm won't insure a car that State Farm itself has declared a total loss,” says State Farm spokesperson Benjamin Palmer. “So, if you want to stay with your current company – for instance, if you want to keep a multiline discount – and you have State Farm insurance, you may be out of luck. State Farm will, however, insure a salvaged car that has been totaled out by another insurer.”

How does a rebuilt title affect insurance?

Insurance for a rebuilt car is more expensive, usually because the insurance company is taking the risk that the car wasn’t repaired properly or fully and could be dangerous on the road.

If you have a car with a rebuilt or salvage title, you will likely find it difficult to get full coverage insurance. While a car can be totaled twice, the value of a previously totaled vehicle is much lower. You won’t see the same amount of money the second time around.

Is it worth insuring a car that has been totaled?

If you have a totaled car that is still drivable or has been repaired, you must insure it to be on the road legally. Liability insurance is required by law in most states, so you need insurance whether you’re driving a totaled car or a brand-new one.

However, in most cases, carrying full coverage insurance is not worth it. That’s because a car with a salvage title has lost most of its value. This might not be the case if you have a collector car.

During repairs, if your car is in a garage and non-operational, you probably don’t need to insure it.

What is a total loss?

A total loss is a car that the insurance company determines isn't worth repairing based on its calculation of the car’s value.

If it will cost more to repair the car than it was worth before the crash, the car is considered totaled. And the repair costs typically need not even be that high. In Iowa, for example, state law requires that an insurance company declare a vehicle as “salvaged,” or totaled, if the repair costs would exceed just 50% of the vehicle’s pre-crash value. Other states have higher thresholds, many at 75% or using a total loss formula (TLF) to calculate the value vs. the repair cost.

If your vehicle is determined to be totaled, your insurer will pay you the pre-crash market value minus your deductible, as long as you have comprehensive or collision coverage on the vehicle.

Can you keep a totaled car?

One of the options for a totaled car is to keep it, which is legal in most states. If you keep your salvage vehicle, you will be paid the actual cash value of the car minus the salvage value and the deductible.

The salvage value is the amount the insurance company would have gotten from a salvage yard for your car. Since you’re keeping the car, you won’t be paid that amount.

If you're considering salvaging your totaled vehicle, there are some factors that you'll want to consider before you decide. 

  • Cost of repair. Is it worth it to repair a totaled car? The insurance company didn’t think so.
  • Insurance. Find out if you can insure the car and what it will cost.
  • Resale value. Your car will be worth a lot less after salvage.
  • State laws. Make sure it’s legal in your state to keep your totaled vehicle even if it is not drivable.
  • Financing. You may need the insurance payout to cover your loan.

Can you drive a car with a salvage title?

If your car has a salvage title, you can't legally drive it on the road until you’ve had the car inspected, gotten a new title and registered it with the Department of Motor Vehicles. The title on a car that has been repaired and inspected may be called a rebuilt title rather than a salvage title. The formula for total loss cars depends on the state.

Once you have done this, you must get the required insurance in your state to drive the car.

Do I need to notify the DMV if my car is totaled?

If you decide to keep a car that has sustained significant damage, then you or the insurance company — it varies by state — must report the damage to the state's Department of Motor Vehicles. These laws protect would-be buyers, who might otherwise be unaware that the car was totaled.

Under the National Motor Vehicle Title Information System, established in 2008, insurance companies and salvage yards must submit information on vehicles damaged by crash, fire, flood or other calamities. The data is available to DMVs, the police, and, for a fee, to the public.