FREE Insurance Comparison

 Secured with SHA-256 Encryption

Call (855) 425-8122

for FREE insurance quotes by phone
Insurance | Free Online Insurance Quotes

Compare Insurance Quotes!

Compare Quotes from Top Companies and Save

 Secured with SHA-256 Encryption

How to Buy Cars Directly From Insurance Companies

Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted...

Full Bio →

Written by

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. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella...

Full Bio →

Reviewed byDaniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn't influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

The lowdown...
  • Insurance companies may take ownership of a vehicle considered a total loss
  • Insurance companies may opt to sell such vehicles at an auction or to a salvage yard
  • If you’re considering purchasing a salvaged vehicle, be sure to compare car insurance policies to see how rates are influenced

Auto insurance companies are, not too surprisingly, in the business of selling auto insurance policies. A customer in need of basic liability, collision, comprehensive, or uninsured motorist coverage usually requests quotes from the top insurance company serving his/her state.

Compare quotes right now by entering your zip code into our free rate tool above.

When thinking about buying a car, turning to an insurance company is doubtfully the first step anyone takes. Insurance companies are not auto dealers. So, why bother contacting an insurance company to purchase a car?

The reason is insurance companies help facilitate the sale of certain vehicles. Specifically, insurance companies promote the sale of salvaged vehicles. Buying a salvaged car through an insurance company rarely involves any difficulties, either.

What is a salvaged car?


A salvaged car reflects a vehicle the insurance company considers a total loss. That means the cost to repair the vehicle would be more than what the vehicle is worth.

A person who pays $15,000 for a car and drives the vehicle for 12 years, putting 170,000 miles on the model, cannot expect to be paid $15,000 if the vehicle is destroyed in a fire.

The resale value would be well below $15,000. The insurance company only reimburses the insured for the value of the car. That is the way insurance works.

Honestly, how could anyone acquire insurance levels on a car that exceeds the value of the car? No insurer could feasibly — or even legally — agree to such a deal.

Free Car Insurance Comparison

Compare Quotes From Top Companies and Save

 Secured with SHA-256 Encryption

Different Examples of a Total Loss

Examples of vehicles suffering a “total loss” include:

  • A car totally smashed and crushed in a highway accident.
  • A car going over a bridge and into 12-feet of water.
  • A building collapsing on top of cars parked in a garage.

In each instance of the above, the result would be a car so destroyed that the inoperable vehicle finds itself earmarked for a scrap yard.

With the proper insurance in place, the driver can file a claim and receive a total loss payment. Once this is done, the insurance company takes ownership of the car.

The former owner likely becomes thrilled to see the “useless metal” taken off his/her hands. The vehicle becomes the insurance company’s problem.

The insurance company could very well sell the car to a junk yard and recoup a small amount of money back. It would seem odd that anyone wishes to buy a vehicle labeled a total loss.

Maintaining a very narrow perspective of what a “total loss” entails creates such an image in someone’s mind.

The Damaged-But-Trusty Car


Imagine a high-mileage vehicle that runs very well due to the owner taking great care of it. Unfortunately, the vehicle’s high mileage and age are accompanied by several dents and scratches. The resale value of the vehicle might be in the neighborhood of $1,800.

The car ends up severely damaged in an accident or another covered event. All four tires are ruined and the body is severely damaged. The repair work on the car would exceed $1,800 turning the vehicle into a total loss.

Upon taking ownership of the car, the insurance company often slates the model for auction. Sometimes, the whole auction process is skipped and a direct sale to a scrap yard commences.

Buyers would then be referred to the scrap yard. Haggling with the scrap yard representatives remains an option. Some may find bidding at auctions to be a potentially better strategy.

At an auction, the bidders may be in a position to restore the car. For example, someone who already has the necessary tires in good condition would simply need to replace them.

If the person is a mechanic, he/she can change the tires, in essence, for free. A mechanic capable of doing the body work can do so without labor costs.

Once restored, the vehicle may resell at a slim-but-nice profit. There are scores of other tales in which a salvaged vehicle can be saved. The person capable of doing something with such a car does need to find a source.

Restoring the vehicle may not even be necessary. Someone with access to buyers could purchase a totaled car and resell the various parts. A brand new oil pan could cost someone $300. Access to a used one at $60 would be an awesome deal.

Insurance Company Associates

Insurance companies do not directly sell the vehicles they acquire to individual buyers after total loss settlements. Likely, the insurance company works with a salvage yard or auction dealer to sell the model.

Contact an insurance company to find out when and where the next local auction is taking place. Unfortunately, some auctions are only open to licensed car dealers.

No one should feel despondent over not being able to access all the auctions. Concentrate instead on the ones that are accessible.

Don’t Venture Carelessly


Purchasing a totaled vehicle at an auction is possible, but doing so might not be the best idea. The inexperienced really should study up on what constitutes a good deal.

Additionally, the buyer really has to know if he/she can restore or resell the vehicle at an acceptable profit level. Otherwise, the deal won’t be anything more than a time and money loser.

Just like comparison shopping for good insurance, detailed effort supports any attempt to buy a salvaged vehicle. Enter your zip code below to compare car insurance quotes.

Compare Insurance Quotes!

Compare Quotes from Top Companies and Save

 Secured with SHA-256 Encryption