Insurance for Cars Bought at Auction

There are no specific auction car insurance policies. However, most cars sold at auctions are classic or salvage cars that require specialized insurance coverage.

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UPDATED: Sep 2, 2021

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Written By: Laura BerryReviewed By: Joel OhmanUPDATED: Sep 2, 2021Fact Checked

Here's what you need to know...

  • There is no one type of insurance for cars bought at auction
  • Many of these cars will require specialty insurance
  • Some companies do not offer specialty insurance, so you should do your research before making any final decisions

If you’re the sort of person who loves to go out and purchase a car at auction, you may think that you need special car insurance.

While there is no specific auction car insurance, you may need to purchase specialty car insurance–such as salvage insurance–depending on the type of vehicle you purchase.

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In the past, if you went to a car auction, you weren’t sure what you might be getting. Often, the person running a car auction would be sold cars that were seized by the government or police, damaged by flooding, repossessed vehicles, and so on.

You weren’t allowed to look at the vehicle beforehand or get a mechanic’s opinion. You wouldn’t even be privy to whether or not the vehicles had clean titles before the auction took them in. If it turned out to be little more than a salvage vehicle, that was your bad luck.

While these types of auctions still exist today, there are other types of auctions as well. Licensed dealers will sometimes conduct auctions of vehicles on their lot to reduce stock. Dealer auctions tend to give you more leeway. You’re able to get information on the vehicles, looking at actual damages, the titles behind them, and what would need to be done in order to fix them up.

What’s more, there are also classic car auctions for people with a lot of money to spend on their cars. Classic car insurance is even available for these purchases.

You also can’t exclude sites like eBay from the car auction list.

It is a fact that eBay has become a go-to source for people looking to find a good deal on their next vehicle. In fact, not only are individuals using eBay to sell their used cars, but car dealerships also use eBay regularly in an effort to sell their vehicles to the highest bidder.

When do you need specialty car insurance such as salvage insurance?

When you purchase a vehicle that has had serious damage due to a car accident, flood, or fire, then you will need to purchase salvage insurance from your auto insurer.

There are many automobile insurers that won’t even write a salvage insurance policy.

It is in your best interest to check some of your local insurance companies to see if you can insure this type of vehicle before you purchase one.

If you purchased the vehicle for parts, for example, then you won’t need to purchase car insurance at all. As long as you don’t drive or register the vehicle, you wouldn’t need to protect it from the harsh treatments of being on the road.

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How do I insure my auction vehicle?

Every vehicle in the country has a VIN (Vehicle Identification Number). This VIN is unique to each vehicle and when a vehicle is manufactured, it is assigned a VIN that is placed in a national database.

Here are some tips regarding your purchase and that VIN number:

  • Each time a vehicle is in an accident, the insurance company, the police department and possibly the company that tows the vehicle all write down that VIN number in their paperwork. This information is also placed in a national database associated with that VIN.
  • No matter what type of auction you are buying a vehicle from, you are, by law, allowed to ask for the VIN. The car dealer or auctioneer is under no obligation to provide you with any other information, but you can typically find out what you need to know from that simple number.
  • Typically, you are going to have to pay for something like a CARFAX report. CARFAX is a company that can provide you with information on any VIN that you type into the system. Some of the minimal information is free, but you will have to pay for a full report.

The benefit of using a service like CARFAX is that it lists every reported accident and/or claim made on a vehicle.

While you could probably find out this information for free, most auctions are time sensitive and a CARFAX report–or something similar–can provide you with the information that you need instantly.

This will also let you know what an insurer will see if you try to purchase insurance using the VIN.

CARFAX is not the only company that provides this service, but they are considered the premier service by many car dealers who use this same service to determine whether a car is worth buying.

Many insurance companies will not provide coverage for vehicles that have been declared totaled by an insurance company.

In addition, a vehicle that has been in a fire or a flood may be uninsurable.

It depends on the insurance company and the extent of the damage as to whether you are going to have difficulty buying a car insurance policy.

Do I need specialty insurance when I purchase a classic car at an auction?

Classic cars are actually a different sort of animal in the insurance world.

In order for an insurance company to view it as a classic car, it must be certified as such. You can purchase a totaled classic car and get insurance for it as long as it has classic car certification.

Insurance companies recognize that a classic car can still have high value even if it is totaled.

Consider these points when buying a classic car at auction:

  • If you purchase a classic car at an out-of-state auction, you will need to consider your shipping needs. Most car shipping companies cover your vehicle if it is damaged while being shipped, but this is something you don’t want to leave to chance. Anything can happen between the two locations, so make sure you’re protected.
  • Any registered vehicle is required to carry auto insurance, and your classic car is no exception. If you purchase a classic car with the intention of not driving it, you should check your state’s laws regarding storing a registered vehicle.
  • You may want to consider coverage regardless because a classic car has such a high dollar value.
  • Unlike modern vehicles, classic cars don’t necessarily have a VIN. There are, however, other ways of identifying what has happened to classic cars in the past due to unique serial numbers and parts put into specific vehicles.

Understanding companies’ insurance methods is just the first step in purchasing your auto insurance. Give them notice of what you’re doing and check to see if it falls within their guidelines.

You want to ensure that you get the best rate as well. Since there are so many policy service options, and so many types of cars to choose from, you’ll want to connect the two in a way that suits your budget, but also keeps you safe. Using a comparison tool to compare the rates between car insurance companies is the fastest and easiest way to accomplish this.

You can compare car insurance rates from multiple companies right now with just your zip code! 

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.

A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

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