How to buy vehicles from insurance companies

Buying a vehicle from an insurance company can be a smart way to find a bargain. These vehicles are often part of a salvage or total loss auction, where cars that have been deemed a total loss by the insurance company are sold at reduced prices.

This article will guide you through the process of buying vehicles from insurance companies, detailing the steps, advantages, and important considerations.

Understanding Insurance Company Vehicle Sales

Insurance companies sell vehicles for various reasons, including:

Total Loss: The cost to repair the vehicle exceeds its market value, so the insurer declares it a total loss.

Recovered Theft: Stolen vehicles that are recovered after the insurance company has paid out a claim.

Lease Returns: Vehicles returned at the end of a lease term that the insurer then needs to liquidate.

These vehicles are often sold at auctions, either directly through the insurance company or via specialized salvage auction companies.

Steps to Buying a Vehicle from an Insurance Company

1. Research and Identify Vehicles: Start by researching vehicles that meet your needs and budget. Websites like Copart, IAAI (Insurance Auto Auctions), and other salvage auction platforms list vehicles from insurance companies. These sites provide detailed listings with photos, vehicle history, and damage reports.

2. Understand the Vehicle’s Condition: Most vehicles sold by insurance companies are categorized based on the extent of damage:

Salvage Title: Indicates significant damage, often from an accident, flood, or other incidents. These vehicles require substantial repairs and a safety inspection before they can be driven legally.

Clear Title: May have minor damage or issues but are generally in better condition.

Non-repairable Title: Vehicles that cannot be legally driven again and are typically used for parts.

3. Set a Budget: Determine your maximum bid based on the vehicle’s estimated repair costs, market value, and your financial situation. Keep in mind additional costs like auction fees, transportation, and potential repairs.

4. Register and Bid: To participate in an auction, you’ll need to register with the auction site. Some sites require a membership fee or a refundable deposit. Once registered, you can place bids online or attend the auction in person. Bidding can be competitive, so it’s important to stick to your budget.

5. Inspect the Vehicle: Whenever possible, inspect the vehicle in person before bidding. If you cannot inspect it yourself, consider hiring a professional inspector. Look for any signs of damage not visible in the photos and assess the overall condition.

6. Complete the Purchase: If you win the bid, you’ll need to complete the purchase by paying the auction price plus any fees. Payment methods vary by auction site but often include wire transfer, cashier’s check, or credit card.

7. Arrange Transportation: After purchasing the vehicle, arrange for transportation to your location. Some auction sites offer shipping services, or you can hire a third-party transport company.

8. Repair and Rebuild: Once you have the vehicle, you’ll need to repair it. If it has a salvage title, it must be repaired and pass a safety inspection to be registered and legally driven. Work with reputable mechanics and body shops to ensure quality repairs.

9. Register and Insure the Vehicle: After repairs are complete and the vehicle has passed inspection, you can register it with your local Department of Motor Vehicles (DMV). Additionally, obtain insurance for the vehicle, noting that insuring a rebuilt salvage vehicle may be more challenging and expensive.

Advantages of Buying from Insurance Companies

1. Cost Savings: Vehicles sold by insurance companies are often significantly cheaper than similar vehicles sold through traditional dealerships. This can be especially beneficial if you have the skills and resources to handle repairs.

2. Variety: Insurance auctions feature a wide range of vehicles, from nearly new models to older, more affordable cars. This variety can provide more options to suit different needs and budgets.

3. Potential for Profit: If you’re experienced in vehicle repair and rebuilding, buying and fixing up salvage cars can be a profitable venture. Rebuilt vehicles can be sold for a higher price, generating a profit.

Considerations and Risks

1. Hidden Damage: Salvage vehicles may have hidden damage that’s not immediately apparent. This can lead to unexpected repair costs and complications. Thorough inspections and due diligence are crucial.

2. Insurance Challenges: Insuring a salvage or rebuilt vehicle can be more difficult and expensive. Some insurance companies may only offer liability coverage, and comprehensive or collision coverage might be unavailable or costly.

3. Resale Value: Rebuilt vehicles typically have lower resale values compared to their clean-title counterparts. Be prepared for this depreciation if you plan to sell the vehicle in the future.

4. Time and Effort: The process of buying, repairing, and registering a salvage vehicle requires time, effort, and coordination with various professionals, including mechanics, inspectors, and DMV officials.


Buying vehicles from insurance companies can offer significant savings and opportunities, particularly for those with the expertise to manage repairs and rebuilds. However, it comes with risks and requires careful consideration and due diligence. By thoroughly researching, inspecting, and budgeting, you can navigate the process successfully and potentially secure a great deal on a vehicle.

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