Are you skeptical when you visit a used car lot? It’s easy to feel like a used car salesperson might be trying to take advantage of you, especially if this is your first time buying a vehicle. But with a bit of research into the car’s history, you can spot red flags and avoid buying an uninsurable jalopy.

How to Find Out a Car’s History

Since 1954, U.S. car manufacturers have applied a vehicle identification number (VIN) to each vehicle made. At the time, there was no industry standard and the VINs varied by manufacturer. In 1981, the National Highway Traffic Safety Administration stepped in to create a standardized VIN system, requiring all car companies to use a 17-digit VIN.

Since no two VINs are alike, they are essentially a “fingerprint.” The information embedded within the VIN includes:

• The car manufacturer
• Country of origin
• Plant that assembled the vehicle
• Model, body type and engine
• Model year

Identify the VIN. You can locate the VIN on the lower left of the car’s windshield or the driver’s side door pillar. You can also find it on your car registration or insurance ID card.

Conduct thorough research. To look up some of a vehicle’s history, visit the National Insurance Crime Bureau’s free VINCheck site. This site offers valuable information about whether the car was stolen and never recovered and whether it had a salvage title. VINCheck is just a starting point since it won’t include information about previous accidents.

Other sites such as CarFax and AutoCheck charge a fee for a vehicle history report but can provide additional useful data such as:

• Accident history
• Service history such as oil changes and transmission replacement
• Type of use such as a taxi or rental car
• Ownership history
• Worrisome title brands such as fire, hail and flood

But keep in mind that not all car accidents are reported and may not show up on a report. For example, if a past owner had a fender bender and decided to pay for repairs themselves, it won’t show up on any report.

Get a mechanic’s inspection. Vehicle history reports are very useful but can be incomplete. The Federal Trade Commission recommends you supplement a vehicle history report with an independent vehicle inspection.

Why Is Car History Important?

A car’s history helps you determine if it’s worth purchasing. If you discover it has a checkered past, you may want to look elsewhere.

A car’s history plays a role not only in your purchasing decision, it’s also potentially in determining your car insurance rates. For example, insurers want to see if there are any red flags (such as a salvage title) that might make the car more risky to insure.

Auto Insurance for Cars with Bad Track Records

While previous accident repairs won’t hinder your insurance purchase, a salvage title probably will. A previous salvage title indicates that the car was deemed a total loss by an insurance company, then rebuilt and deemed roadworthy. But many insurers see vehicles with a past salvage title as too risky to insure and might decline to offer certain coverage types, or coverage altogether.

“While most insurers shy away from offering comprehensive and collision coverages for cars with salvage titles, they might be willing to offer liability coverage for these types of vehicles,” says Dan Scroggins, managing director at AAA Club Alliance.

Liability car insurance is required in most states, but it pays others, not you. You’ll want collision and comprehensive insurance:

• Collision coverage pays for car damage, such as a dent from backing into a pole or your crushed fender if you rear-end another car
• Comprehensive coverage pays for problems such as theft, vandalism, floods, fires, collisions with animals and falling objects

Legwork Pays Off

Before you plunk down thousands of dollars on a used car, a little bit of legwork can go a long way. The VIN number is a good starting point, coupled with an independent vehicle inspection by a mechanic. The last thing you want to do is find out you bought a car with hidden damage or a car that is uninsurable.

You’ll also want to know how much insurance will cost for your prospective car. Compare car insurance quotes from multiple companies before you buy the car so that the insurance bill doesn’t take you by surprise.

“Although it’s crucial to research a vehicle worth purchasing, you’ll also want to do your homework on the coverage you can get for the car. Since you need coverage when you drive off the lot, you’ll want to compare coverage options before you have the keys in hand,” says Scroggins.