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Can you still drive a 'totaled' car?

By Karen Aho on February 9th, 2012

Just because you have a "totaled" car doesn't mean you can't drive it.

It may make good sense to revive a car your insurance company has deemed totaled after a crash, flood or other calamity.

After all, insurance companies simply call a car totaled if they determine it will cost more to fix than a certain percentage of the car's market worth in the moment before the crash. That number can be anywhere from 70 percent to 100 percent, depending on the insurer.

When does it make sense to try to save a totaled car? Perhaps you didn't have full coverage and aren't even due an insurance payout. Or maybe you're covered but would rather take the cash - that full market value - and have the insurer deduct the value of your totaled car so you can fix it up yourself.

This may be a particularly attractive option if you plan to drive the car into its golden years. It can be difficult to resell a car with a history of severe damage. So, it may make sense to keep the car if you're able to bring it up to safety standards without sinking the bank. For example, maybe much of the damage is cosmetic body damage, which you don't mind.

Taking this route will require submitting detailed information to your state's department of motor vehicles and getting a properly branded salvage title. (In some states, the insurance company is required to submit this information to the DMV.)

Depending on the state, you'll end up with either a generically named "salvage title" or one specifying the type or extent of the damage, such as "flood damage," "fire damage," "rebuilt," "nonrepairable" or "total loss."

Car insurance challenges

The purpose of these titles is to keep you from passing on a car that could have severe underlying and undetectable damage to an unsuspecting buyer. Still, you can take that title and shop around for insurance just as you would with a standard title.

However, insurers are going to be quite cautious about offering collision and comprehensive insurance if you own this type of car. If there's an accident, it would be difficult for the insurer to know whether the damage was a result of that accident or already existed.

In addition, some insurers - the largest auto underwriter, State Farm, is one - won't even offer liability on a car that they themselves have deemed totaled. So you'll have to shop around.

First and foremost, make sure the vehicle is repaired to a safe standard. You should be able to find liability insurance, and at no greater cost than before.

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