Salvage title cars have sustained enough damage that the cost to repair them exceeds their value, so they’re “totaled.” A salvage title car that has been repaired and is roadworthy is referred to as a rebuilt title vehicle.
Some car insurance companies will charge you a higher premium for a rebuilt title vehicle, says David Suarez, former business development manager at Mercury Insurance.
But if the price of that salvage Mercedes or Honda seems irresistible or you just can’t let go of your favorite ride, here’s what you should know about insuring salvage cars.
- A salvage title indicates a vehicle was declared a total loss, while a rebuilt title means the car has been repaired and is roadworthy.
- Cars with rebuilt titles typically have a lower market value—20% to 40% less than vehicles with clean titles.
- In many states, an inspection is required to verify that a salvaged or rebuilt vehicle is roadworthy. Once inspected, the vehicle is assigned a branded or rebuilt title.
What is a salvage title?
Insurance companies typically declare a vehicle salvaged when the cost of the repairs exceeds the car’s value. The vehicle could have been totaled in an accident, damaged by hail or floods or stolen and recovered months later.
Depending on your state, a car is usually considered a total loss if the repairs cost between 50% and 90% of the vehicle’s value.
If an older-model vehicle is involved in an accident, the insurance company is likely to total it rather than repair it simply because the labor involved in the repairs is expensive.
“Companies do it for economic reasons,” Suarez says.
What’s the difference between a salvage title and a rebuilt title?
Cars with salvage titles have been declared a total loss and can’t be driven legally. But once a salvage car has been repaired and passes an inspection from a state-approved salvage inspection operator, it can qualify for a rebuilt title. A vehicle with a rebuilt title can be registered, driven and sold.
However, it is common for people to mistakenly refer to rebuilt cars as salvaged title cars, even though they are two distinct. Since many people use these terms interchangeably when discussing insurance for a salvaged car, we’re working under the presumption that it has been fixed and rebuilt.
Can I drive a car with a salvage title?
A car with a salvage title cannot be driven on the road legally, even if it still runs. However, depending on the severity of the damage, some of these cars can be repaired and rebuilt.
Many states will require you to have the vehicle inspected to ensure it is roadworthy. If the car has been salvaged or rebuilt, it receives a “branded” or rebuilt title.
Can I get insurance for a salvage title car?
Yes, you can. But be aware that not every car insurance company will insure salvaged vehicles. For instance, Travelers and Direct General are two companies that do not write policies for salvage cars.
Suarez estimates that 20% to 30% of auto insurance companies won’t write these policies. But, he says if you’re trying to insure a salvage vehicle following a natural disaster, it might be harder to get any coverage.
“Carriers tighten up on their desire to write salvage vehicle (policies),” Suarez says.
He says that car insurance companies are concerned after such events because unscrupulous car dealers may clean up the car so it looks presentable but not repair the damage.
How can I insure a car with a salvage or rebuilt title?
Insuring a car with a salvage or rebuilt title can be more challenging than insuring a vehicle with a clean title, but it’s possible.
- Research insurance companies: Not all insurance companies offer coverage for salvage or rebuilt title vehicles. Look for insurers that provide insurance for these types of vehicles.
- Gather necessary documents: Be prepared to provide documentation such as receipts or invoices for repairs, any inspection reports from a certified mechanic or state agency and photos of the vehicle post-repair.
- Compare insurance quotes: Once you have the necessary documents, contact multiple insurance companies to get quotes. Be honest about the vehicle’s title status and provide all the required information.
- Be prepared for a higher premium: Depending on the insurer, you may have limited coverage options. Some insurers may only offer liability coverage or charge higher premiums due to the vehicle’s history.
- Review your policy carefully: Once you choose an insurer, review the policy terms and conditions carefully to understand what is and isn’t covered.
Insurance for salvage and rebuilt title vehicles often come with higher premiums, reflecting the increased risk the insurer assumes. Be sure to factor this into your budget.
What documentation do I need to get insurance for a salvage car?
To obtain auto insurance for these vehicles, you’ll need a copy of your title, registration and VIN. Some insurance companies may also require an appraisal, inspection or a mechanic’s report.
How can I tell if it’s a salvage vehicle?
State laws require that the seller inform a buyer in writing that the vehicle they want to purchase is salvaged, Suarez says. Check the car’s vehicle identification number (VIN) or title to ensure you’re not unknowingly purchasing a salvage vehicle.
The National Motor Vehicle Title Information System (NMVTIS) provides information on a vehicle’s condition or history. You can purchase those reports from several companies.
Use the National Insurance Crime Bureau’s VINCheck, a free lookup service for the public, to determine if a vehicle may have a record of an insurance theft claim and has not been recovered or has ever been reported as a salvage vehicle.
Will I pay extra for salvage title insurance?
Yes, but that is partially because not as many companies offer this coverage. With less competition, rates can be higher.
It also depends on the company you choose. Companies that cater to high-risk drivers and are willing to insure rebuilt vehicles typically have much higher rates than companies that insure safe or standard-risk drivers and vehicles – as in a car with a clean title and a driver with a clean driving record.
Since non-standard companies take on more risk, their rates are generally higher than others. Remember, auto insurance policies are written based on the vehicle’s year, make and model, among other factors.
“The car’s diminished value usually isn’t considered,” Suarez says.
So, if you buy a salvage 2018 Toyota Camry, you’ll pay the same amount for your car insurance as someone with a 2018 Toyota Camry that hasn’t been damaged.
Also, some carriers charge you extra for insurance, even though your vehicle is worth less than comparable cars.
What to look for when buying a vehicle with a rebuilt title
If you’re considering buying a vehicle with a rebuilt title, here are some critical steps to take to ensure you don’t buy a car that winds up not being a good deal:
- Research the vehicle’s history. You can do this through VINCheck, which is free, or pay to get a vehicle history report from Carfax, AutoCheck or the National Motor Vehicle Title Information System.
- Be wary of frame damage. Repairing frame damage is costly and requires significant work and, if not done correctly by a professional mechanic, may result in other problems.
- Inspect for flood damage. Most experts recommend not buying a rebuilt title car with flood damage.
Try to find where the car repairs were done and research the reputation of the mechanics that did the work. If possible, review the seller’s repair records and receipts to know how much work was required.
Even if everything checks out, you should always have a car inspected by a trusted mechanic before offering to buy it.
Can you get full coverage on a vehicle with a rebuilt title?
Companies that write car insurance policies for vehicles with rebuilt titles tend to offer liability insurance only. While it is difficult to find an insurance carrier that will provide the owner the option of adding on comprehensive and collision, it’s not impossible.
Insurers may not be willing to provide comprehensive coverage, which protects you if damage to your car isn’t due to an accident. It would cover theft, vandalism or damage from a natural disaster. You also may be unable to obtain collision coverage, which covers your vehicle if it’s damaged in an accident.
How to get a salvage title cleared
Requirements vary as states have different names, descriptions and qualifications for clearing and making a salvaged car roadworthy again.
Generally, we refer to this as a rebuilt title, but your state and insurer may use different language, such as “reconstructed.” So, while requirements vary, the insurance company typically wants a mechanic’s statement that the car is roadworthy.
How does a salvage or rebuilt title affect the value of a car?
A salvaged or rebuilt title car will be worth 20% to 40% less than a clean title car, according to Kelley Blue Book. The value of vehicles with rebuilt titles also depends on the amount of damage, the make and model, and the auto market in your area, so have a private appraiser determine the market value.
FAQ: Rebuilt title vehicles
Do all car insurance companies insure salvage or rebuilt vehicles?
No, not all car insurance companies insure salvage or rebuilt vehicles. Coverage options vary by insurer, and some may refuse to provide insurance for these types of vehicles due to the higher risk. It’s important to shop around and compare different insurers to find one that offers coverage for salvage or rebuilt vehicles.
Is it possible to finance a car with a rebuilt title?
It is possible to finance a car with a rebuilt title, but it may be more challenging than financing a vehicle with a clean title. Many lenders hesitate to finance rebuilt title vehicles due to their history of significant damage.
Even if financing is available, you may encounter higher interest rates and stringent requirements. Check with various lenders to find options that work for your situation.
Can you switch insurance companies with a rebuilt title car?
You can switch insurance companies with a rebuilt title car, but your coverage options may be limited. Some insurers may not offer policies for rebuilt vehicles, while others may provide coverage with higher premiums.
It’s a good idea to compare quotes and coverage terms from different insurance companies before making the switch to ensure you get the best coverage for your vehicle.
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