What You Need to Know About Rebuilt Title Car Insurance
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According to Kelley Blue Book, the average advertised used car price was $25,500 at the end of July 2022, or 28% higher than a year ago. To save money, you may be considering a rebuilt title car. How does the used car market affect rebuilt title car insurance policies and rates?
This guide will answer all your questions about rebuilt title car insurance, including what to look for in a policy and the pros and cons of purchasing a rebuilt title car.
If you own or want to buy a rebuilt title car and need auto insurance, Compare.com allows you to compare quotes from hundreds of reputable auto insurance providers at once.
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A Word On Rebuilt Title Cars
You already know that car insurance companies hate losing money. So when someone damages their vehicle and it’s declared a total loss — meaning the cost of repairs exceeds its value — the insurance company doesn’t toss the wreck in the junkyard. Instead, the insurance company will sometimes purchase the remains of the car, gives it a salvage title, and sell it at a salvage auction.
But who would want a wrecked car? A lot of people, actually. You can fix the vehicle if the damage is primarily to the body or engine area (structural damage is a different story). Once the car is repaired and passes a special inspection, a rebuilt title replaces the salvage title.
So, what does a rebuilt title mean? A rebuilt title suggests that the salvaged car was restored and ensures the buyer knows its history.
What Is Rebuilt Title Car Insurance?
Rebuilt title car insurance helps cover cars with rebuilt titles. Usually, these vehicles come with liability insurance only (minimums for bodily injury and property damage liability) and no full coverage, which includes first-party comprehensive coverage and collision coverage.
Most insurers forgo extending full coverage insurance on rebuilt title vehicles due to the challenge of determining the cause of damages (e.g., pre-existing or accident-related). Therefore, if an insurer does offer comprehensive or collision coverage on a rebuilt salvage car, expect any payout to be much lower than a traditional payout.
Should I Buy a Rebuilt Title Car?
Well, the answer to that depends on many things. First, consider the pros and cons of buying a car with a rebuilt title.
The Pros of Buying Rebuilt Title Cars
- They’re cheap: According to HowStuffWorks, the rule of thumb is that a fully reconstructed salvage car is worth roughly 60% of a vehicle of the same make, model, and year with a clean title. If you dream of driving a newer BMW but can’t afford it, a rebuilt title car could be an option.
- If you’re careful, you can buy with confidence: When purchasing a rebuilt title car, have a qualified, trusted mechanic inspect the vehicle to assess repairs and if it’s roadworthy and safe to drive. Then, request paperwork showing the extent of the damage and repairs or contact the collision shop that did the work. Also, get a CarFax vehicle report that will detail the car’s history and let you know if it’s a fire or flood car.
The Cons of Buying Rebuilt Title Cars
- There may be hidden damages: The rebuilt title car may look shiny and new but have serious problems lurking. The biggest villains are cars that have sustained flood damage. Water slowly erodes its electric and mechanical systems when a vehicle gets wet, eventually ruining essential electronics. Unfortunately, flood cars aren’t always marked as such, so use Consumer Reports’ checklist for spotting a flood-damaged car to identify warning signs, like water lines and new carpet in an older vehicle.
- There’s usually no warranty: Generally, rebuilt salvage cars do not come with a warranty.
- You may need to pay cash: Getting a car loan for rebuilt title cars can be tough. You may need to prove to a lender that the vehicle is in excellent shape and ready to drive.
- It may be hard to acquire rebuilt title car insurance: Car insurance companies should give you liability coverage, but they may want to provide only partial coverage for your rebuilt title car. As a result, expect to pay higher premiums than clean title vehicles. That said, always seek out competing quotes from multiple providers.
- Your resale value will be lower: Even if your car runs perfectly, it will always have a rebuilt title, which means its value will never be as high as a similar, non-salvaged car.
What’s the Difference Between a Salvage Title and a Rebuilt Title Car?
A salvage title vehicle is declared a “total loss” and issued a salvage certificate. Any repair costs outweigh its market value. A rebuilt car is often a former salvage vehicle that is rebuilt and passed an inspection deeming it safe to drive in your state. Each state issues rebuilt salvage titles differently, thanks to varying reconstruction and drivability standards.
Another difference between rebuilt and salvage title vehicles is color designations. For example, blue titles represent salvage vehicles, and orange titles mean rebuilt salvage vehicles.
How Do I Find Rebuilt Title Car Insurance?
It’s a good idea to get competing quotes from several auto insurance companies to find rebuilt title car insurance. Some will charge higher surcharges than others.
Once you’ve found a rebuilt salvage car insurer, you will need to provide your insurance agent with additional details to get a quote and enroll in a policy.
These details will cover the vehicle history and include photos of your vehicle, original repair estimates from the rebuilder/insurance company, and a certified mechanic‘s statement that confirms the vehicle is in good working condition.
Remember, many insurers are hesitant to insure rebuilt salvage title cars. Any restoration process might have ignored critical structural issues that could present problems for the owner and insurer. That’s why comparing car insurance quotes from multiple providers is very important.
Is It Worth Buying a Rebuilt Title Car?
Buying a rebuilt title car comes down to savings and value. Every rebuilt title car is different, resulting in savings of 60% of the car’s value or more buying rebuilt vehicles over clean title vehicles.
Consider any rebuilt title car a great deal if a vehicle is declared a total loss or near total loss due to exterior damage which does not affect its key components (e.g., engine and transmission). In other words, the lesser the damage, the greater the likelihood of satisfaction with your rebuilt title vehicle.
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