Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: May 6, 2022

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In a Nutshell

  • When a car is damaged in an accident or another loss, it will either be repaired or totaled
  • A damage claim becomes a total loss claim when the total repair costs exceed the car’s pre-loss market value
  • Some cars are totaled but the insurer because they don’t hold much value and not because they aren’t operable
  • If you total your car, you can keep it if the salvage value of the car is deducted from the settlement
  • If you’d like to buy a totaled car from an insurer, you purchase the car at an auction or through a salvage dealer

If you ask the average car consumer whether or not they’d buy a totaled car, the answer would probably be no.

The major perception is that totaled cars have undergone major repair work after being mangled in a crash. The average driver believes that cars that have been totaled and are not salvaged suffer more breakdowns.

While many cars that have been declared total losses do require significant repair work to be operable again, that’s not always the case.

There are cases when a car is hardly damaged and is still totaled; it depends on how it’s damaged and how old the car is.

But most people don’t know how to buy a car from an insurance company. If you’re interested in learning how to buy a car from insurance salvage, here’s a guide just for you.

If you’re also looking for cheaper and better car insurance, enter your ZIP code above and compare at least three to four policies today!

When is a car declared a total loss?

You’ve probably heard the terms “totaled” and “total loss” more than a few times when you’ve shopped for cars on the private market. It’s not uncommon for someone to sell a car that has previously been totaled.

Selling a previously-totaled car is completely legal as long as the seller is upfront and tells you about the loss before you sign the salvaged title.

According to the Insurance Information Institute, a car is declared a total loss by an insurance company. After the vehicle owner files a claim for damage to their vehicle, the insurance company will investigate the incident and estimate the damage.

If the estimator assesses the damage and writes an estimate showing that the repairs will cost more than the car is worth, the claim goes from a simple damage claim to a more complicated total loss claim. Often, you can still buy a car from an insurance company after it has been declared a total loss, though.

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How is a car’s value officially determined?

Whether or not a damaged car will be totaled is entirely based on what the book value of a vehicle is.

If a car is worth $15,000 and it needs $5,000 in repairs, it won’t be totaled. but a car that’s worth $3,000 and requires the same amount of repairs will be.

That’s why you should understand how a car is valued by insurers so that you can make sense of why it might benefit you to buy wrecked cars from insurance companies.

There are a few different resources that insurance adjusters use to put an actual dollar amount on the car’s value.

Unfortunately, there’s not a single method that can be used universally by every insurer since there are so many variables that will drive the value of a car up or drop it down.

Here are a few things that will factor in when the adjuster decides on a figure:

  • The vehicle make and model and how popular it is in the region that you live in
  • The age of the vehicle and trim level
  • How many miles have been driven in the car and if there’s a new engine or transmission
  • If any major work or new parts have been installed recently
  • The overall condition of the exterior and interior of the car
  • How much the car will cost to replace at local dealerships
  • How much similar vehicles have sold for on the private market in surrounding areas

Buying Totaled Cars: What is a salvage title?

After a car has been declared a write-off and it’s totaled by the insurer, the car has to be re-titled. Cars can only be re-titled if they are repairable and they don’t have any frame or rust damage.

When the car is re-titled, it won’t have a regular title; instead, it will be issued a salvaged title.

When you are buying a totaled car from insurance and you sign a salvage title, it means you’re accepting that the car has been totaled in the past.

Look closely at the title before you make a final negotiation when buying a car privately. That way you never purchase a vehicle that has sustained significant damage without knowing it.

When does it make sense to buy a totaled car?

It’s never wise to be buying totaled cars if they’ve caught fire under the hood or if they were flooded and have rusted. You also shouldn’t buy a car if the owner chose do-it-yourself repairs and low-budget replacement parts.

You need to make sure that the work was done by a professional and that manufacturer’s parts were used.

It’s wisest to buy older vehicles that were totaled because of their value and not because of the damage.

If you see that a 2002 Ford truck is for sale with a salvaged title, find out what type of damage was sustained.

If the decision was made because there was a dent in the trunk that would have cost more to repair than the trucks are selling for, it could be a wise purchase! Make sure you do your research before you buy cars from insurance companies.

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Shop Around at an Auction or Salvage Dealer to Buy a Totaled Car

There are a few different ways that insurers sell totaled cars sold to the company after a claim is closed. Selling the totaled car is how the company will make money back after they have settled the claim. There are several methods for how to buy cars from insurance companies.

One way that cars are sold is by putting them up for auction at a traditional auction event or by posting them on auction sites. If you’re willing to place bids, an auction could be an exciting option for how to buy vehicles from insurance companies.

Another possibility for you is to shop for previously totaled vehicles that are for sale by a salvage dealer. The company will sell the dealer the car at a discounted price, and the commercial dealer will do all of the repair work to sell the model for a profit. So you can buy wrecked cars from insurance companies at dealerships as well.

If you don’t like doing the bidding, it’s best to do your shopping at a dealership.

You have to decide what is best for you when you’re shopping for a new car. If you want to find the best deal, looking for a totaled car that’s in good condition could be a great alternative.

Before you make a decision, use the world wide web to see how much insurance on the car will cost, and then you can proceed to make the decision to buy cars from an insurance company.

Start comparison shopping today and find a good deal and the best auto insurance rates! Enter your ZIP code below to begin!