Insurance Eligibility For Salvage Vehicles


Many times, insurance companies will declare a damaged vehicle a salvage vehicle. This usually happens when it has been in an accident, a stolen recovery, malicious property damage (paint scratches, interior or glass damage) or damaged by severe weather or a natural disaster. In North Carolina for example, a vehicle may be defined as a salvage vehicle by an insurance company if repairing it would cost more than 75% of the vehicle's fair market value (ACV).


Insurance companies that declare your car totaled, for example, will send you money for its market value. You can choose to keep the car after your claim is paid, or assign the title back to the insurance company. Once they own the car, they can keep it, junk it, or sell it through an insurance salvage auction.


If the damage has not completely ruined the vehicle, sometimes they will fix the car or truck and sell it through an insurance auction as a rebuilt clean title vehicle. In North Carolina all vehicles sold through insurance salvage auctions are eligible for full insurance coverage the moment the vehicle has been purchased and during repairs and after repairs have been completed by the buyer. This makes repairs easy and inexpensive and some states don't require non-safety repairs like body dents, interior, windows or paint be completed first before the vehicle can be re-titled, insured and licensed to drive.


In North Carolina, the insurance company, vehicle broker or dealer that sells a salvaged vehicle must disclose its status to the buyer in writing. To conceal damage is a misdemeanor punishable by fines. However, there is a gray area: if the buyer repairs the vehicle, he or she may apply for a new certificate of title. When the car is sold again, it has a clean title.


Consumers must protect themselves from forged titles, switched VIN numbers, and other efforts to conceal damage by unscrupulous salvage yards and auto dealers. For more information regarding salvage vehicles in North Carolina, call the Department of Transportation, Division of Motor Vehicles, Salvage Office at (919) 861-3500.