How to Insure a Car with a Rebuilt or Salvage Title

Does a Salvage Title Affect Car Insurance Rates?

Before you invest in a salvaged car, you may want to take the time to understand exactly what you’re getting yourself into. The following information can help.

What is a Salvage Title Vehicle?

A salvage title indicates that a vehicle has been previously damaged and declared a total loss by an insurance company. This usually happens when a car is damaged to the point that the cost of repairs exceeds the car’s value. The insurance company will therefore find it more cost-effective to issue the owner a payout for the value of the vehicle versus investing in costly repairs.

Since insurance companies want to recoup the loss of that insurance claim, the companies will sell the totaled car to an auto repair company to be rebuilt. The vehicle may then be sold again, but most state laws stipulate that the sellers have to sell the car as a “salvage title” rather than a clean title so that future buyers have all the facts and can make an informed decision when purchasing the vehicle.

If you see the words “salvage title,” you know that the car has experienced serious damage, such as:

  • A major collision
  • Fire or flood damage
  • Riot damage
  • Hail or weather damage
  • Vandalism

If you’re planning to do some of the repair work yourself, salvaged vehicles may help you save money. Otherwise, buying a salvage car may simply not be worth the headache. You may be better off buying a used or new car instead of dealing with any hassle related to a salvage vehicle.

Why Are Salvage Cars Hard to Value?

Salvage cars typically have no Kelley Blue Book value. When they do, they tend to be valued at 20-40% less than other used cars with similar mileage. Also noteworthy is the fact that most financing companies are reluctant to finance a salvage car. 

There are two main reasons for this. First, it’s impossible to know how a car’s prior damage might affect its future performance. Second, car buyers are reluctant to purchase a car with a history of significant damage. This means that salvage cars lack market value. 

You can use the vehicle identification number (VIN) to obtain a Carfax vehicle history report, which shows the history of the car, but this information doesn’t typically increase the car’s overall value.

How Do Car Insurance Companies View Salvage Vehicles?

Most insurance companies are reluctant to provide insurance coverage for a salvage vehicle, especially when you’re looking for collision coverage or comprehensive coverage.

It’s difficult to assign an accurate value to a salvage car. Insurance companies may also not trust the rebuild. For instance, untrustworthy mechanics may tamper with the odometer or find ways to conceal the age and condition of the car. This makes auto insurance companies wary of rebuilt vehicles.

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3. The Risks of a Rebuilt Title Insurance and How to Mitigate

Large car insurance companies are more likely to insure a rebuilt title. This is because they have a larger pool of customers and thus can handle the added risk.(7)

Feb 6, 2021 — Major insurance companies that cover repaired vehicles include Progressive and The Hartford. Insurance companies that will insure cars after a 1 answer  ·  Top answer: Yes, Progressive covers formerly salvage-titled vehicles. If the car was rebuilt and inspected after being salvaged, Progressive offers full coverage (8)

Frequently Asked Questions

  • A rebuilt title is given to a car that was badly damaged and then repaired. The car is often repaired by a mechanic who specializes in rebuilds, but that’s not always the case. To receive a rebuilt title, the car had to pass a rigorous state inspection. Even so, cars with rebuilt titles should cost much less (20 to 40 percent less) than the same car with a clean title.

  • A salvage title is for a car deemed a “total loss” and issued a “salvage certificate” by an insurer. A rebuilt title is for a car that was once salvaged and has since been repaired or refurbished. To earn a rebuilt title, the car must pass a strict inspection process that ensures the car is ready to go back on the road safely. The car should still be worth less than one with a clean title.

  • A rebuilt title is not necessarily a bad thing. It does come with some drawbacks, like expensive collision and comprehensive coverage. But car buyers looking for a cheap car that they will only purchase liability coverage for can find a good deal buying a car with a rebuilt title. Be sure to have the car thoroughly inspected by a competent mechanic before you seal the deal.

  • Good news: you can still get full coverage on a car with a rebuilt title. But you should ask yourself if the car is worth a full-coverage policy. On the one hand, finding an insurer willing to write a full-coverage policy for the car will be difficult. On the other hand, the car itself is not worth as much and may not be worth the extra expense and hassle of getting full coverage.

How much does it cost to get a salvage title rebuilt?

Getting a salvage title will cost you somewhere between $4 and $97 dollars. In most states, it’s somewhere between $10-$50 dollars, so you should expect to pay about this much.

Our Recommendations for Auto Insurance

If you’re committed to investing in a salvage vehicle, we recommend you look at a number of top cheap car insurance providers. Simply enter your zip code below to compare auto insurance quotes from providers in your area.

FIND OUT HOW MUCH YOU CAN SAVE ON YOUR CAR INSURANCE SAVE ON YOUR CAR INSURANCE

GEICO: 9.5 out of 10.0

We rate GEICO as the best overall company due to its strong reputation for low prices, discounts and other great features. GEICO offers liability coverage to salvage title vehicles provided that the vehicles pass an additional inspection. If your vehicle undergoes an additional inspection, GEICO may provide full coverage.

USAA: 8.9 out of 10.0

We rate USAA as the best military provider, serving members of the military and their families. If this criteria applies to you, then you have access to one of the best car insurance companies in the industry. USAA can provide you with a rebuilt title once the vehicle is deemed roadworthy.

State Farm: 9.0 out of 10.0

We recognize State Farm for offering the best student discount. State Farm will provide insurance for a rebuilt vehicle. If you have other vehicles insured through State Farm, you can also take advantage of the company’s multi-vehicle discount.

What is title washing ?

States have different rules governing title brands. A car may qualify for a lemon title brand in one state but not another.

Because of these different rules, some dishonest car buyers will move cars between states to wipe away a title. This is called title washing.

Title washing can be tough to avoid, and damage may not appear on a standard vehicle history report when a buyer researches a potential sale. However, you may be able to spot title washing by doing an AutoCheck or CarFAX VIN Check, which tracks vehicle information between states.

Is it worth rebuilding a salvage car?

Salvage cars may seem to not have sustained much damage from a cosmetic standpoint, but they can still be extremely costly to repair. You might find that the time, energy, and cost of repairing a salvage title vehicle isn’t worth it and ultimately decide to buy a new car.

What insurance companies cover rebuilt titles?

Below you’ll see which insurance providers offer coverage for salvage vehicles that have been repaired and earned a rebuilt title. Some carriers don’t offer coverage in all states, however.

Car Insurance Company Insurance Coverage for Salvage Cars? 21st CenturyYes (company does business in California and Hawaii only)ArrowheadYesThe HartfordYesInfinityYes; In CA if qualify for  state “good driver discount”National GeneralYes in AL, AZ, MO, NC, NY, PA, RI, WA; In CA if qualify for state “good driver discount”OmniYesProgressiveYesSafecoYes in all states except CAMercuryYesAllstateYesFarmersYesGeicoYesUSAAYesState Farm YesAAA YesCSAAYesAAA of Southern CaliforniaYes

What are salvage and rebuilt titles?

Let’s say your car has been in a major accident or suffered serious damage due to theft, vandalism or natural disaster.

If the cost of the damage is close to or in excess of the fair market value of your car, the insurance company may declare the car a total loss. Your state’s transportation agency may give the vehicle a salvage title — though laws regarding when a salvage title is required may vary by state. In many states, salvage title vehicles can’t be driven on public roads.

If significant repairs have been done on a salvage car, it may be issued what some states call a rebuilt title. A rebuilt title indicates that a salvage title car has gotten the repairs necessary to make it safe for driving. To qualify for a rebuilt title, a salvage vehicle may need to pass state-mandated safety and anti-theft inspections. Required inspections may vary from state to state.

How to get a salvage title cleared?

Requirements vary as states have different names, descriptions and qualifications for a salvaged car to be cleared and made roadworthy again, says Penny Gusner, senior consumer analyst for CarInsurance.com.

“In general, we refer to this as a rebuilt title but the language by your state and insurer may be different, such as ‘reconstructed.’ So while requirements vary, typically the insurance company will want a statement from a mechanic that the car is roadworthy,” she says. 

“That is especially true if you are looking for physical damage coverages of comp and collision.”

Questions to Ask When Considering a Car with a Rebuilt Title

Be prepared to ask a lot of questions. There are a ton of variables when buying a rebuilt car, and no two rebuilds are the same. You should ask the following questions no matter what:

  • How was the car damaged?
  • Where was the car damaged?
  • How much damage did the car sustain? (a percentage is fine)
  • What repairs were done?
  • Who did the repairs?
  • What parts of the car have been replaced, and where were the parts sourced?
  • Do you have the maintenance history of the vehicle (including before it was totaled)?
  • Do you have the state inspection documentation and proof of title status?

If you’re buying from a seller who was not the person or business that did the repairs, you also want to get information about who did the repairs and when. The seller should have a complete record of receipts for the repairs, and you should review those receipts and contact anyone who worked on the vehicle. You should also ask your trusted mechanic to review those receipts.

Last, you should inquire with your current insurance company about whether they can insure the prospective vehicle.

Rebuilt Vehicle Red Flags

There are some red flags you should look out for when buying a rebuilt title car. The first is that the seller seems cagey or defensive when you ask the above questions. Any seller will want to sell quickly, but sellers of rebuilt vehicles should understand the level of due diligence a potential buyer should take. If you feel unduly pressured to buy, just walk away.

You should look for gaps or misalignments in the body panels and ensure the paint matches. Open and close the trunk and every door and window. Everything should work smoothly. Look for large dents, take pictures if possible. Look under the car to see if the fuel lines look good. Examine the tire tread to ensure it’s evenly worn. And make sure the airbag light works.

Signs of fire or flood damage are also a red flag. Vehicles that sustain these types of damage should never be repaired. A sure sign of flood damage is leaves, silt, mud, or sand in the trunk or glove compartment. The car could also have a musty or moldy smell.

7. READ How to Insure a Car with a Salvage Title in Texas?

What type of insurance is preferable? — It is for insurance companies to make this decision. Typically older vehicles are considered salvaged even in (21)

How do you get a salvage title cleared? — Is insurance on a salvage title more expensive? Let’s find out. Start comparing car insurance rates now (22)

Mar 29, 2021 — Many insurance companies won’t offer full coverage for a car with a rebuilt title. As for salvage titles, the pool of ideal buyers is even smaller. You’ (23)

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