Purchasing a damaged car from an auction in the USA always involves some risk, though to varying degrees. If you want more control over what you're buying, look for vehicles from "insurance" sellers. This way, you'll know exactly what damages need to be repaired, allowing you to price them accurately and avoid unpleasant surprises. Buying from "non-insurance" sellers may seem cheaper at first glance, but it comes with higher risks that can reveal themselves in expensive repairs or legal issues.
At auctions like Copart and IAAI, vehicles are sold by various sellers. From a buyer’s perspective, the most important distinction is between "insurance" sellers and "non-insurance" sellers. The difference between them is crucial, especially if you're looking to purchase a car with a known history and clear details of its damages.
Who is an "insurance" seller?
An "insurance" seller is an insurance company that auctions a vehicle after it has been damaged. The car was damaged in a collision, flood, hailstorm, or due to fire, and the insurer determined that repairing it was not worthwhile (referred to as total loss). Instead of repairing it, the insurer pays the owner a compensation and puts the vehicle up for auction.
Features of vehicles from "insurance" sellers:
- The vehicle is not repaired before sale – You see the car exactly as it was delivered by the owner. This is a significant advantage because you get a full picture of the damages and don't have to worry about hidden repairs or makeshift fixes.
- The damage history is reliable and documented – Insurance companies follow procedures and report each case honestly and transparently. This guarantees greater transaction security.
- Lower risk of hidden defects – Vehicles sold by insurers typically have their damage history well-documented, reducing the risk of hidden defects. This gives you more confidence that you won’t have to deal with unexpected, costly repairs after purchase.
Who is a "non-insurance" seller?
A "non-insurance" seller is any entity that is not an insurance company. These can include:
- Private individuals,
- Car rental companies,
- Car dealers,
- Workshops,
- Car buying companies,
- Car lots.
Vehicles from non-insurance sellers often have already been "touched" by someone – you can’t be sure whether repairs were done professionally or temporarily.
Drawbacks of vehicles from "non-insurance" sellers:
- Hidden defects – "Non-insurance" sellers may have an incentive to conceal some vehicle flaws, especially when it comes to structural damage or mechanical issues that could lower the car’s value. Additionally, the lack of transparent information about the vehicle's history may lead to purchasing a car with serious, hard-to-detect problems.
- Potential issues with repair quality – If a car was repaired after significant damage, such as a collision, there's a risk that the repairs were not done according to the manufacturer’s requirements, which could affect the vehicle’s safety and durability. Some repairs might have been done hastily, leading to quick wear and further repairs.
- Unclear vehicle history – Vehicles sold by "non-insurance" sellers may not have a complete collision or repair history, increasing the risk of purchasing a car that was seriously damaged but not properly labeled. Often, there is insufficient evidence regarding the car's condition when it entered the market, making it harder to assess the real costs of potential repairs.
Why is it better to buy from an "insurance" seller?
- Transparency – Cars from insurers are not "messed with" before being sold. You know exactly what you're buying.
- Reliable damage history – Insurance companies are required to document damages thoroughly. The risk of hidden defects is lower.
- No "repairs for sale" – Cars are not disguised, repainted, or partially assembled to look better in photos.
- Greater purchase safety – Fewer "tricks," greater predictability of repair costs.