
When shopping for a used car, you may come across terms such as clean title, salvage title, and rebuilt title. Each of these terms provides an insight into a vehicle’s history and can significantly impact its value, insurability, and future resale potential. In this article, we’ll explore more about rebuilt titles and explain everything you need to know about rebuilt titles and insurance eligibility.
Understanding Rebuilt Titles: Definition and Key Differences
A rebuilt title is a designation given to a vehicle that was previously declared a total loss — typically due to severe damage or theft — and has subsequently been repaired and passed state inspections to be deemed legally roadworthy again. This rebuilt status can greatly influence how insurance companies perceive the vehicle, often leading to it being classified as high risk, which in turn affects coverage options and premiums.
The key difference between a rebuilt title and other designations lies in the vehicle’s history and repair status.
Comparison: Rebuilt Title vs. Salvage Title
A rebuilt title signifies a salvage vehicle that has been repaired and passed inspection to be legally driven on roads. In contrast, a salvage title indicates that a car has been declared a total loss by an insurance company, often due to severe damage or theft.
State Variations
Some states may use different terminology, such as reconstructed, restored, or assembled, to describe a rebuilt title vehicle. Also, states can differ in the inspection and repair processes required to issue a rebuilt title, so it’s important to check your local regulations.
How Do Rebuilt Titles Work: The Process
Here’s a brief overview of how rebuilt titles work:
- A vehicle suffers significant damage and is declared a total loss.
- The insurance company issues a salvage title.
- The vehicle is sold at auction or to a rebuilder.
- The rebuilder repairs the vehicle to a roadworthy condition.
- The vehicle undergoes a state inspection to ensure it’s safe and properly repaired.
- If approved, the state issues a rebuilt title.
- The car can now be legally driven and sold but with the rebuilt title designation.
The Economic Effects of a Rebuilt Title on a Vehicle
A rebuilt title designation can affect a vehicle’s value and rate of depreciation.
Influence on a Car’s Market Value
Vehicles with rebuilt titles generally have significantly lower market values than similar models with clean titles. This decrease in value can range from 20% to 50% or more, depending on the car’s make, model, and repair quality.
Potential for Depreciation
Rebuilt title cars typically depreciate faster than those with clean titles. You might find the future resale of this type of car challenging, as many buyers are wary of vehicles with this designation.
Insuring a Car With a Rebuilt Title: A Detailed Guide
Insurance options for rebuilt title cars vary, with many insurers offering liability coverage but making comprehensive and collision coverage more difficult to obtain. Insuring a rebuilt title car can be challenging, and you might find that some insurers refuse to cover this type of vehicle altogether. In fact, some sources suggest that only about 20% of insurance companies will consider insuring rebuilt title cars due to concerns about potential hidden damage, the structural integrity of the vehicle, and the difficulty in assessing the true value of any future claims.
There are a number of factors that can affect the insurability of a vehicle with a rebuilt title. These include:
- The extent of the previous damage
- The repair quality
- The age and make of the vehicle
- State regulations
- Individual insurer policies
We recommend the following tips when trying to obtain insurance for a rebuilt title car:
- Gather all the documents relating to the car’s repair and inspection, and be prepared to provide additional information about the vehicle’s history and current condition if asked. Insurers might ask for proof of repairs, inspection certificates, and even an independent appraisal.
- Consider obtaining a comprehensive vehicle history report and getting an independent inspection from a trusted mechanic.
- Be upfront with insurance providers about the vehicle’s history, and shop around with multiple companies.
- Try working with insurers specialized in high-risk or non-standard auto insurance for a better chance of success.
- Make sure you understand the limitations of any coverage you’re offered.
Pros and Cons of Buying a Car With a Rebuilt Title
There are advantages and disadvantages to purchasing a car with a rebuilt title designation.
Pros
Rebuilt title prices are typically lower compared to similar vehicles with clean titles. Therefore, there’s the potential to get a good deal if the repairs are done properly. You might also get the opportunity to own a higher-end model at a lower cost.
Cons
It can be challenging to obtain comprehensive insurance coverage for rebuilt title vehicles, and if full coverage is available, you’ll usually pay higher premiums. Experts estimate that rates can be up to 20% to 40% higher than for clean title vehicles. There’s also the potential for hidden damage or poor-quality repairs, and it can be difficult to get a fair resale value for your vehicle, even based on its rebuilt title value.
Legal and Regulatory Considerations
Disclosure requirements when selling a rebuilt title car can vary by state. Some states have specific laws regarding the sale and registration of rebuilt title vehicles. Additionally, crossing state lines with a rebuilt title car may require additional inspections or paperwork.
Get Expert Advice From American Auto Insurance
We recommend carefully weighing up the pros and cons before purchasing a rebuilt title car. Be prepared to face challenges when insuring and reselling the vehicle, and consider the long-term costs, such as potentially higher insurance premiums and faster depreciation. If you decide to buy, get a professional inspection first and make sure to negotiate the price based on the rebuilt title status.
For more information on insuring rebuilt title vehicles or to find the best auto insurance rates in Illinois, call 773-286-3500 or contact our expert team.
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