It’s often more difficult to insure a car with a rebuilt title, even though it’s legal to drive it on the road. In most cases, an insurance company will only provide liability coverage, and will refuse to offer comprehensive and collision coverage due to the risk of hidden and unrepaired damage.
Several major insurers do sell policies for cars with rebuilt titles, however. The best way to find insurance for a rebuilt title car is to shop around.
What is a rebuilt title?
To understand why it’s more difficult to get insurance for a car with a rebuilt title, it may help to have a little background on the different types of titles.
A title is a document that’s issued by the state. It indicates proof of ownership and other important information about the vehicle. If you’ve ever been in the market for a used car or truck, you’ve likely noticed that some vehicle descriptions mention a specific type of title.
There are multiple types of titles, including:
- Clean title — This means the car has never been totaled, and the odometer has never been rolled back. A brand new car will have a clean title. Most of the used cars you’ll see (even those that still have a lien against them) will have a clean title as well.
- Salvage title — This means the car has been severely damaged and declared a “total loss” by an insurance company. A total loss means the cost to repair a car is higher than the car’s actual cash value. When this happens, the insurance company pays the owner a settlement and takes possession of the car. The car then loses its clean title and is issued a salvage title. Such a vehicle cannot legally be driven on the road, and in most cases can’t be registered. The insurance company may sell the car to another party to be scrapped/parted out or repaired and restored.
- Rebuilt title — If a car with a salvage title is repaired and restored to a drivable condition, it may receive a rebuilt title. As part of this process, the owner needs to have the car inspected according to state guidelines to ensure it’s safe. Once the car passes inspection and receives a rebuilt title, it can be legally driven on the roads.
Once issued, a car will carry a rebuilt title for the rest of its useable life. There’s no chance it will ever again have a clean title.
In many states, you can tell at a glance what type of title a car has. Clean titles are often printed on green paper, salvage titles on blue paper, and rebuilt titles on orange paper.
A rebuilt title affects a car’s value
According to JD Power, a car with a rebuilt title may be worth 20 to 40 percent less than an equivalent car with a clean title. So on the surface, a car with a rebuilt title might seem like a great deal in your used car hunt.
You should proceed with caution, however. Even after restoration and an inspection, a car with a rebuilt title may still contain hidden damage that could cost a lot of money to repair. You’re also likely to discover that it’s harder to find insurance for a car with a rebuilt title. And if you do find insurance, it may provide less coverage and cost more than a comparable policy for a car with a clean title.
Can you insure a car with a rebuilt title?
Some insurance companies refuse outright to insure a car with a rebuilt title. Due to inconsistencies in the quality of repair and restoration, variances in the inspection processes (standards vary by state), and the potential for hidden damage and safety issues, these insurers deem rebuilt title cars too great of a risk for coverage.
Many major insurance companies, however, will at least provide a liability-only policy for a car with a rebuilt title. This means the policy provides coverage for any damage or injuries you cause to other drivers in an accident, but it won’t cover damage to your own car. So if you’re responsible for an accident and damage the car, you’ll have to pay out of pocket for those repairs.
Which insurance companies cover rebuilt titles?
Several major insurance companies offer insurance for cars with a rebuilt title including:
- Allstate
- Farmers
- GEICO
- Progressive
- Safeco
- State Farm
- USAA
Some of these companies have limitations on where (in what states) the coverage is offered.
What to expect when buying insurance for a car with a rebuilt title
So while it may be harder to insure a car with a rebuilt title, and coverage may be limited to liability only, policies are available. When buying a policy, expect the insurance company to request some information beyond what’s usually needed for a quote.
- A statement from a certified, independent mechanic indicating the car is roadworthy
- Photos and videos of the car showing its condition at the time of the policy sale
- The original repair estimate from when the car was totaled, outlining the damage
Gather whatever documentation you can find about the car’s history and repair. The insurance company may want to see it as proof of the repair.
Is it more expensive to insure a rebuilt title car?
It’s more expensive to insure a rebuilt title car because fewer companies insure cars with rebuilt titles, there’s less urgency for those companies to be competitive when it comes to price. That means you may expect to pay a higher insurance premium than for an equivalent car with a clean title.
When shopping for insurance, it’s always a good idea to check with multiple companies. You might find one company offers better rates or more generous coverage than others.
When it comes to a rebuilt title, proceed with caution
A car with a rebuilt title may seem like a bargain. But you should pursue it with a great deal of caution. Experts recommend having a qualified, independent mechanic inspect the car from bumper to bumper before you buy it. They also suggest avoiding any vehicle that had been declared a total loss due to a flood.
Finally, remember that finding insurance for your rebuilt title car may be more of a challenge. While you’ll find companies that will sell you a policy, you may not be able to get full coverage, and you will likely pay more for the coverage you do get.