If you own a salvage title car or rebuilt title car, you may not be aware of whether it can be properly insured. Traditional car insurance policies aren't sold to cover salvage titles, and not every insurance company will want to take the risk to insure even a rebuilt title. Fortunately, with just a bit of effort, you can still get coverage for a rebuilt title car.
An independent insurance agent can make finding rebuilt title insurance easy. They'll make sure you get equipped with all the coverage you need for your vehicle. But for starters, here's a closer look at salvage title vehicles and rebuilt title car insurance.
What Is a Salvage Title Car?
"Salvage title" refers to a vehicle that an auto insurance carrier has declared to be worth less than the cost to repair it, due to extreme damage. According to Keith Griffin, an automotive journalist and president of the New England Motor Press Association, "A salvage title is given to any vehicle that has sustained damage worth 75% or more of its value. For example, if you drive a 2002 Honda Civic worth $9,415 and it suffers $7,061 in damage in a collision, it’s going to be branded with a title stamped 'Salvage.'" Some states call this a "junk title" rather than a salvage title.
This brand stays with the vehicle for the rest of its time on the road, from owner to owner. You cannot change it once it has the brand of a salvage vehicle. This practice is in place to protect consumers from buying a car that may have structural flaws or compromised safety features. In fact, car insurance companies won't write a policy for a salvage title car unless it gets rebuilt and then officially inspected.
Cars may be classified as salvage titles after they've been involved in an accident and totaled, or even after they've been stolen and badly damaged. But the end result is the same, the damage to the vehicle would cost more to repair than the car is worth.
To qualify for a salvage title, the vehicle has typically experienced one of the following scenarios:
- Serious damage from an accident or a natural disaster (e.g., hurricane, flooding)
- Has a manufacturing defect
- Has an altered odometer
- Has been stolen and badly damaged, then recovered
Totaled cars that can qualify for a salvage title brand include:
- Collision-damaged cars
- Flood-damaged cars
- Hail-damaged cars
- Stolen cars that have been paid off by insurance and later recovered by law enforcement
- Cars vandalized with spray paint, those that have suffered rolling damage, or those that have major dents and breakages
Any of these situations could cause the car to be proclaimed a total loss. According to the Kelley Blue Book, cars with salvage titles typically have 20% to 40% less value than an equivalent, non-salvaged car. Once you buy the car, have it rebuilt, and pass a state inspection, you can then apply for a “rebuilt title” to drive on public roadways.
What Is a Rebuilt Title Vehicle?
A rebuilt title car or reconditioned title car still falls under the auspices of the salvage brand, and in most cases, it's a crime to sell a rebuilt vehicle without stating that it was once under a junk or salvaged title. While the term varies a bit from state to state, it's generally used to describe vehicles that were once branded as salvage and then underwent repairs or restorations. In most states, a car must pass several inspections to ensure that all safety features work correctly before a vehicle can receive a rebuilt title.
What Are the Disadvantages of Buying a Car with a Rebuilt Title?
Buying a rebuilt title vehicle or repairing a salvage title vehicle to transform it into a rebuilt title can come with various risks. Some of the key disadvantages of rebuilt title cars include:
- Pricey auto insurance
- Reduced vehicle value
- Increased difficulty in finding enough auto coverage
Not all insurers are willing to insure rebuilt title vehicles. Make sure to consider this potential drawback when determining if a rebuilt title vehicle is a good choice for you.
What Is Salvage Title Insurance?
Salvage title car insurance isn’t a type of auto coverage. In fact, salvage titles are not able to be driven on roadways and cannot be insured at all. You must repair the vehicle adequately enough to get a rebuilt title in order to legally drive and insure it.
Salvage title insurance, which is really rebuilt insurance, is simply car insurance applied to a vehicle with a rebuilt title. Most insurance companies will sell you a basic liability insurance policy for your rebuilt title automobile. This is reasonable when you consider that the car passed a state registration inspection. Plus, you are not at a higher risk of hitting another driver because your car has a rebuilt title.
Can You Insure a Salvage or Rebuilt Title Car?
So, can you get full coverage insurance on a salvage title? It's not possible to insure a salvage title vehicle at all, but it is possible to insure a rebuilt title car when you know where to shop.
Rebuilt titles can be difficult to insure because not all car insurance companies will want to take the risk of offering a full coverage policy for a rebuilt title car. But with the help of an independent insurance agent, you can easily find rebuilt title insurance in your area.
Another option is to just get liability coverage. Liability is the easiest policy to buy for your rebuilt title auto. Liability insurance will safeguard you when an accident happens and you’re at fault. Adding comprehensive insurance and collision insurance to your coverage is possible, but can be a bit more complicated. Again, an independent insurance agent can help you find the coverage you need.
Coverage Availability for Clean Titles vs. Salvage and Rebuilt Titles
The type of car insurance coverage you can get for your vehicle depends on the type of title it has. You're also not legally allowed to drive junk titles or salvage titles on the road. The table below demonstrates driving eligibility and coverage options by vehicle title.
| Car Title | Can be Legally Driven on the Road? | Liability-Only Coverage Available | Full Coverage Available? |
|---|---|---|---|
| Clean Title | Yes | Yes | Yes |
| Salvage Title | No | No | No |
| Rebuilt Title | Yes | Usually | Sometimes |
| Junk Title | No | No | No |
Are Salvage Titles More Expensive to Insure?
Does a salvage title affect insurance costs? Keep in mind that salvage titles cannot be insured or legally driven on roadways at all. For vehicles that can be insured, auto insurance costs are based on factors such as the car’s year, make, and model.
Of course, the driver’s record has a big influence on the final premium, too. This is no different for rebuilt title cars. Even though your vehicle’s value has been downgraded, you shouldn't expect to receive a special discount.
In fact, some insurance companies add a 20% surcharge when the insured vehicle has a rebuilt title due to the increased risk factor. An independent insurance agent will be able to secure a variety of rebuilt title insurance quotes and give you the best pricing options.
What Insurance Companies Cover Salvage Titles?
It's not possible to insure a salvage title vehicle, but you can sometimes find coverage for a rebuilt title car. It’s been estimated that 20% to 30% of car insurance companies won't offer rebuilt title insurance. But if you know where to look, you can still find the coverage you need for your rebuilt title car. Some car insurance companies that offer rebuilt title insurance are better than others, though, which is why we've put together a list to make your coverage search easier.
Where can I get insurance on a rebuilt title?
| Companies Offering Rebuilt Title Insurance | Overall Carrier Star Rating |
|---|---|
| Nationwide |
|
| USAA |
|
| American Family |
|
| The Hartford |
|
These top-rated car insurance companies offer coverage for rebuilt titles. An independent insurance agent can help you secure a policy from one of these outstanding carriers.
What Documentation Will You Need to Insure a Rebuilt Title Car?
Car insurers will probably ask you to submit copies of the following documents before issuing a policy for a rebuilt title:
- Rebuilt title document
- State vehicle registration
- Vehicle Identification Number (VIN)
- Mechanic’s report or appraisal
The insurance company may perform its own inspection as well.
In addition, the car insurance company may review the resources below to learn more details about your rebuilt title:
- The National Insurance Crime Bureau (NICB) to confirm the vehicle is listed as having a salvage or rebuilt title
- The National Motor Vehicle Title Information System (NMVTIS) for a review of the vehicle history and condition
- CARFAX when verifying the vehicle’s history and condition
If you have any further questions about the process of insuring your rebuilt title, contact your independent insurance agent.
The Benefits of Working with an Independent Insurance Agent
Independent insurance agents are pros at insuring vehicles of all kinds, including rebuilt titles. They'll make sure you get set up with all the car insurance you need to fully protect your rebuilt title. And since they shop and compare policy rates and options from multiple carriers for you, they'll also make sure you walk away with the best blend of coverage and cost.
Sources
https://www.carinsurance.com/Articles/how-to-buy-insurance-for-salvage-title-car.aspx
https://www.valuepenguin.com/car-insurance/why-avoid-salvage-cars-and-what-do-if-you-bought-one
https://www.valuepenguin.com/how-get-car-insurance-salvage-title
https://www.progressive.com/answers/insurance-salvage-title-car/
