How do you buy cars directly from the insurance company? [Expert Review]

You can buy cars directly from the insurance company through auto auctions that sell totaled vehicles. Insurers are usually hesitant to fully insure rebuilt cars, as they may not be as safe. Although guidelines vary by state, liability coverage is mandatory. Liability coverage averages around $43.03/mo in the U.S. Be aware that these vehicles will normally need a salvage title, which has its own complications. Compare auto insurance rates on cars bought at auction now.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Feature Writer Rachel Bodine

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: Dec 30, 2021

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Things to Remember

  • Auto insurance companies may deem a vehicle a total loss if the cost of repair is around 80 percent of its total value.
  • Insurers will typically take possession of a totaled vehicle and sell it at auction.
  • Rebuilt-titled vehicles that have been repaired are usually worth less money, very difficult to insure with full coverage, and won’t be worth much at resale.
  • Re-titling a salvaged vehicle with a “clean title” is considered to be fraud.

If you know how to buy cars directly from the insurance company, you can save a lot of money. It might be a great idea, as some vehicles aren’t drastically damaged but simply cost too much to repair compared to the remaining value of the car.

Be aware that these vehicles will normally need a salvage title, which has its own complications. You may be unable to get a car loan. Auto insurance for salvaged vehicles may cost more than a typical car, but insurers will often only allow you to purchase liability-only coverage for salvaged cars.

If you’re looking for cheap insurance for auction cars, we can help. Before learning more about how you buy cars directly from the insurance company, enter your ZIP code above to get free quotes from multiple insurers.

How to Buy Damaged Cars Direct From Insurance Companies

How do you buy salvage cars directly from insurance companies?

When a car is involved in an automobile accident, it might be too damaged to repair. These accident damaged cars for sale are determined to be a total loss. NOLO reports that most states estimate a total loss occurs when the cost of repair is 80 percent of the estimated value or if the vehicle is deemed unsafe to repair.

But can you buy cars from insurance companies and what do insurance companies do with totaled cars? Auto insurance companies don’t usually sell these totaled cars themselves at insurance auto auctions. If you’re wondering how to buy salvage cars, they instead sell them via auto auctions.

How do you buy cars at wholesale auctions? These are generally the same auto auctions who sell impounded, abandoned, or repossessed vehicles. There are even many online options, making the process even simpler.

These insurance salvage cars for sale are frequently sold at auctions hosted by companies like Auto Auction Mall, Copart, Dashub, and IAAI.

The following video from Auto Auction Rebuilds discusses how you can bid on Copart, for instance.

If you’re wondering how you can buy cars at auction without a license, these are some options.

You can even find places that allow you to buy salvage cars without bidding thanks to a “buy it now” option such as those on IAA – Insurance Auto Auction. Others offer live car auctions.

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Auto Insurance for Salvage Vehicles

Salvage vehicles are more difficult to insure. Since the structural integrity may have been compromised, these cars are considered to be less safe and may buckle under less pressure than a new vehicle.

If my insurance totals my car, can I keep it? Possibly, if you wanted to repair it yourself. They deduct the amount they estimate they’d receive from selling it at auction. Though it would save money in the long run, that’s going to make it difficult to get comprehensive and collision coverage to cover your own vehicle.

Although guidelines vary by state, liability coverage is mandatory. The table below shows the average liability auto insurance rates by state in the U.S.

Average Annual Liability Auto Insurance Rates by State
StatesAverage Annual Rates
North Dakota$282.55
South Dakota$289.04
North Carolina$357.59
New Hampshire$393.24
New Mexico$462.21
South Carolina$497.50
West Virginia$501.44
District of Columbia$628.09
Rhode Island$720.06
New York$784.98
New Jersey$865.55
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The insurance that would typically cover your own vehicle includes comprehensive and collision. But if insurers refuse to sell that to you out of concerns for the integrity of the vehicle, it’s also likely you won’t be able to get a loan to buy it.

This is largely due to the fact that lenders usually require full coverage of the car while you’re paying back the loan to protect their assets. If you can’t get full coverage auto insurance, you probably won’t get the loan.

When is a vehicle considered salvage?

There is a difference between salvaged and totaled vehicles. You may hear them used interchangeably, but they’re not quite the same. Typically, salvaged vehicles were once considered totaled in an accident, but not all totaled vehicles are salvaged.

Salvaged cars are typically those which have been repaired after great damage. This damage could come from various things, such as:

  • Car accident involving a collision with another vehicle or object
  • Flood damage
  • Fire damage
  • Heavy vandalism
  • Hail damage
  • Recovered stolen vehicle

The table below shows the difference between clean, salvage, and rebuilt titles.

Details of Vehicle Titles by Title Type
Title TypeColor of TitleIssuing FactorsProsCons
Clean titleGreenIssued for new or used vehicles with little to no damageNo damage or repairs to deal withMost expensive upfront cost
Salvage titleBlueIssued for vehicles whose damages exceed the value of the vehicleUsually very cheap to purchaseNo insurance available, can't be driven legally, and repairs can be costly
Rebuilt titleOrangeIssued for vehicles that were salvaged but have been repaired and passed an inspectionCheaper than a new or used car to purchaseCan be driven legally but can be hard to find more than liability insurance
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Essentially, once a vehicle is totaled out, it might be rebuilt or repaired to an operable state. Once it’s considered safe to operate, it can be re-titled as a salvage car.

This video from Donut Media further explains salvage titles.

The value of the vehicle changes, too. The industry typically estimates that salvage vehicles have 20 to 40 percent of their Kelley Blue Book value deducted.

Title Washing For Salvaged Vehicles

The salvage industry has led to an illegal practice known as “title washing.” CarFax discusses title washing as fraudulently changing a title’s status so that the history of the car is wiped out. This can lead to previously totaled-out cars being given a clean title.

This is important, as totaled cars might be less structurally sound as a result of its history. If it was involved in a crash and rebuilt, some parts may not be as strong as they once were.

The National Motor Vehicle Title Information System tracks five factors on a vehicle in an effort to reduce “title washing.” These are the five factors:

  1. The current state of the title and title’s last date.
  2. The brand history.
  3. The odometer reading of the vehicle.
  4. The totaled out loss history.
  5. The salvage history.

This data can be used to help prevent “title washing” of 57,000 vehicles every year, according to GovInfo.

If you’ve been looking into how to buy salvage cars direct from insurance companies, whether in the UK or U.S., you’ll still need auto insurance coverage.

Now that you know more about how to buy cars directly from an insurance company, enter your ZIP code below to get free quotes from multiple insurers.

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Enter your ZIP code below to view companies that have cheap auto insurance rates.

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