Salvage Title vs. Rebuilt Title: How They Impact Your Insurance Coverage

Once an insurance company declares a vehicle a total loss, it doesn’t necessarily have to go to a scrapyard. Instead, the car insurance company can consider offering it a salvage title vs. rebuilt title after completing extensive repairs. 

If you’re evaluating a vehicle with one of these types of titles, you might be able to get a great deal because of its history. But make sure you understand what each type of title means before proceeding. Here’s a look at what to expect.

Understanding Salvage Title

What is a Salvage Title?

Once an insurance company reviews damage on a vehicle after an accident and determines that the repair costs exceed the vehicle’s value, the title might become a salvage title.

The car might have experienced one of the following incidents that led to its extensive damage and salvage title determination.

• Accident
• Weather damage
• Water damage
• Theft

Some vehicles are never safe to drive again after becoming a salvage title. Others can be great vehicles for many years to come.

People seek salvage title vehicles to use for spare parts or because they are handy and can fix up the car at a low cost to have a driveable vehicle for well below the market value.

Pros and Cons of Salvage Titles

Purchasing a vehicle with a salvage title can offer many advantages and disadvantages. Before shopping around, make sure you know what you’re committing to.

Pros

• Get the vehicle at a cut-rate price
• Those with mechanic skills can make the car driveable for minimal expense
• Acquire spare parts at a discount to repair another vehicle
• Might not be in the worst shape mechanically if you don’t mind overlooking cosmetic damage

Cons

• Damage could extend to the frame
• The vehicle may never pass a safety inspection to become road-worthy
• The title will forever remain a salvage title, limiting resale value
• It will have minimal value on the market no matter how much money you pour into it
• Some insurance companies might refuse to insure a vehicle with a salvage title

Understanding Rebuilt Title

What is a Rebuilt Title?

Once someone has taken a salvage title vehicle and repaired it, they might be able to obtain a rebuilt title for it. This title signifies that the vehicle is now safe and legal to operate on the road. It will still tell any future buyers or insurance companies that the vehicle has a storied history, but it does offer the convenience of being deemed roadworthy. 

Some states have more stringent processes for a title to go from salvage to rebuilt than others. It all depends on your area’s rules and regulations.

Pros and Cons of Rebuilt Titles

A rebuilt title is more advantageous than a salvage title for consumers considering purchasing a vehicle. But you’ll still want to weigh the pros and cons before purchasing one of these vehicles.

Pros

• Can get a good running vehicle at a fraction of the cost
• Damage might have been mostly cosmetic, meaning it runs well for many years to come

Cons

• Damage history could come back to haunt you with costly repairs and issues
• Finding an insurance carrier to cover your rebuilt title vehicle could be challenging
• If you later decide to resell the vehicle, you might struggle to move it, even at a low cost

Salvage Title vs. Rebuilt Title: What Are the Key Differences?

If you’re evaluating rebuilt title vs. salvage title vehicles, know that there are distinct differences between the two.

Vehicles with a salvage title still require enormous and costly repairs to make them roadworthy again. Each state has a different designation for what a salvage title means in their area. Your DMV can provide specifics on what your state outlines as a salvage title so you have a better idea of what you’re getting into. Just know that these vehicles are not roadworthy yet and will need extensive work to be roadworthy.

In contrast, rebuilt titles are vehicles that were once salvage titles but have undergone the necessary repairs to make them drivable again. Don’t be fooled by the name. It doesn’t mean that anyone rebuilt the vehicle from the start. It just means that it was once a salvage title that underwent the necessary repairs to pass inspections in your state to become a fully functional vehicle.

When it comes to deciding between purchasing salvage vs. rebuilt vehicles, unless you’re especially handy, you’ll be better off purchasing a rebuilt vehicle. 

Can You Get Insurance on a Salvage Title Car?

You cannot get insurance on a salvage title car before completing the necessary repairs and converting the title to a rebuilt title. Salvage titles are vehicles that are totaled, which means no insurance company wants to insure a car that has been determined to be too damaged to drive.

The car must undergo inspections, and your state must deem it ready to return to the road before an insurance company will consider insuring it.

Can You Get Insurance on a Rebuilt Title Car?

You can get insurance on a rebuilt title car. That’s because these vehicles have met the standards to drive on the road in your state. 

Many insurers will offer liability coverage, including uninsured motorist coverage, personal injury protection and medical payments coverage. But you’ll likely struggle to find an insurer willing to provide comprehensive car insurance coverage or collision coverage for vehicles with rebuilt titles. That’s because the insurance company knows that these rebuilt vehicles could still face hefty expenses from old damage, which could cost the insurance company a great deal of money.

Vehicles with rebuilt titles might also be more costly to insure. You’ll need to weigh that cost with the savings you can experience by purchasing a rebuilt title vehicle to decide if it is worth it.

How to Get Auto Insurance for Salvage or Rebuilt Title Cars

While you can’t get auto insurance on a salvage title car, you can get it on a rebuilt title car. But you’ll need to allow yourself some time to find the right insurer for the job. Here’s what you should expect during this process.

• Shop insurance carriers: Some carriers will have no interest in providing you insurance for your rebuilt title car. Others will provide liability on the vehicle but not comprehensive. Some carriers might be willing to provide full coverage for the right vehicle. You’ll just need to shop around to see what’s available to you.
• Expect higher rates: Most insurers will have higher rates for rebuilt titles than clean titles so don’t be too shocked by the options that you receive.
• Evaluate carrying minimal coverage on the vehicle: You don’t want to skimp on your liability coverage but you might consider insuring the vehicle’s value at a low cost. That way, you can manage your rates and also recognize that the resale value of a rebuilt title vehicle will be far lower than a similar vehicle with a clean title.
• Keep an open mind that a clean title might be better for you: Some people don’t have the time to commit to the more complicated processes and procedures that rebuilt titles entail. Consider that you might be better off getting a clean title vehicle if you feel strongly about having comprehensive coverage on your vehicle in case anything happens to it.

How Does Salvage or Rebuilt Title Cars Affect Insurance?

Having a salvage title on a vehicle will prohibit you from getting insurance on the vehicle. But a rebuilt title has more options, so you’ll just need to shop the coverage. Your insurance rates will likely be high for a rebuilt title, but if you feel comfortable opting only for liability coverage, it might be worth it to purchase the vehicle with a rebuilt title.

A More Affordable Vehicle Option but With Limited Insurance Coverage

Vehicle purchasers considering rebuilt vs. salvage vehicles looking to save some money on the transaction can often find a great deal on a vehicle. However, they’ll need to be aware of the limitations that they’ll face with getting insurance on the vehicle and know that the vehicle’s resale value will be limited.

Frequently Asked Questions