How to Purchase Damaged Vehicles From an Insurance Company

Written by maggie gebremichael
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Insurance companies purchase damaged or salvaged vehicles for a variety of reasons. Most cars were involved in accidents and were "totalled," that is, the cost of repair exceeded the car's market value. Other cars were recovered after theft or were damaged because of a natural disaster, such as a flood. Inventories usually include both old and new makes or models, of both import and domestic models. If you purchase a vehicle with a salvage title, you might be unable to get collision or full insurance coverage.

Skill level:
Moderately Easy


  1. 1

    Determine an overall budget and gather the necessary cash because you might have to pay for the car immediately. You can spend less than £650 for a damaged older model (such as a 2000 Nissan Sentra), although its condition likely will be horrible. Some auctions provide financing options; most auction charge each buyer fees based on their winning bid (e.g., 5 per cent).

  2. 2

    Search for auctions in your area so that you can inspect the inventory before making a purchase. Many insurance companies sell salvage cars to third-party auction houses. Auctions typically are held on a weekly basis at a set time and place.

  3. 3

    Check online auctions like or, which hold auctions throughout the United States. You usually can bid live during the auction or submit a pre-bid before the auction takes place.

  4. 4

    Obtain a written contract before paying. A seller can discuss terms and fees with you, but a written contract protects you in the event of fraud or theft (e.g., you never receive the car after paying in full). Do not take possession of the car with only the payment receipt. Demand temporary tags and a copy of the application for change of title.

  5. 5

    If you purchase a vehicle located in another state, you'll have to weigh your delivery options. Some auctions also ship vehicles to buyers for reasonable fees, such as £260 to £325 to ship from North Carolina to New York.

Tips and warnings

  • Determine if the auction is open to the public before attending. You might have to pay an entry fee if you are not a licensed car dealer.
  • Be prepared for competition, usually from used car dealers. Most auctions sell cars "as is," which means that you cannot return a car if you encounter a major defect. You might be able to pay extra to receive a limited (30 day) guarantee of the engine or body.

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