Rebuilt Title Car Insurance: What You Need to Know

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Written By kevin

A financial strategist with a knack for demystifying taxes and insurance, Kevin distills complex concepts into actionable advice.

Purchasing a used vehicle can be an affordable way to get a nice car while saving money. However, you may come across used cars with a “rebuilt title” designation that seems confusing. It’s important to understand what a rebuilt title means, especially regarding insuring these vehicles. This comprehensive guide on rebuilt title car insurance will provide you with the information you need to make an informed decision.

What is a Rebuilt Title?

A rebuilt title is issued when a car has been damaged to the extent that an insurance company deems it a “total loss.” This typically means the repair costs exceed the vehicle’s pre-accident value. However, if the car is repaired and inspected to meet certain safety standards, it can legally return to the road with a rebuilt title.

So in essence, a rebuilt title indicates that a car was once severely damaged but has since been rebuilt to a roadworthy condition.

Key Differences: Rebuilt vs. Salvage Titles

It’s crucial to distinguish between a rebuilt title and a salvage title, as they have different implications.

Salvage Title: Indicates a damaged vehicle that has not been repaired and remains in its “totaled” state after an accident. These cars cannot be legally driven.

Rebuilt Title: Indicates a damaged vehicle that has been repaired to meet road safety standards after being deemed a total loss. These rebuilt cars can be legally driven once inspected.

The key difference lies in the state of repair – salvage means damaged, while rebuilt means restored to working order through extensive repairs.

Is Rebuilt Title Car Insurance Available?

Contrary to popular belief, you can insure a rebuilt title car in most states. However, it is often more challenging than insuring a clean title vehicle.

Many insurance companies consider rebuilt title cars high-risk, so they may only offer basic liability coverage rather than full coverage insurance. Liability only covers damage you cause to others if you’re at fault in an accident. It does not cover repairs to your own vehicle.

Finding the Right Rebuilt Title Car Insurance

Not all insurance companies will insure rebuilt title vehicles. Here’s a breakdown:

  • Companies like State Farm and Geico provide full coverage options for rebuilt cars.
  • Others like ProgressiveAllstate, and Mercury may only offer liability-only policies.
  • Some insurers like Liberty Mutual avoid covering rebuilt titles altogether.

With such variability between providers, it’s crucial to shop around and compare quotes from multiple companies to find the best rate. Look for an insurer that provides the level of coverage you want at a competitive price.

Why Rebuilt Title Insurance Costs More

Insurance rates for rebuilt title cars tend to be higher than cars with clean titles. This mainly comes down to the increased risk insurance companies associate with vehicles that have prior severe damage.

In fact, a 2023 Insurance Information Institute study found a significant premium gap:

  • Average annual rate for a clean title car was around $1,500
  • Average annual rate for a rebuilt title car was about $2,000

That’s nearly a $500 annual difference – a substantial added cost for insuring a rebuilt vehicle.

However, many factors impact insurance pricing, so a rebuilt title car isn’t doomed to high rates in all cases. The driver’s record, age and gender, vehicle type, age, safety features and more also play a role.

For example, a teenage male with speeding tickets may pay over $4,000 annually to insure a high-performance rebuilt sports car. But a 45-year old mother with a clean record may only pay $1,200 to insure a rebuilt economy sedan.

So shop around to find the best rate – a rebuilt title car can still be economical to insure with the right insurance provider and driver specifics.

The Risks of Buying a Rebuilt Title Car

While rebuilt title vehicles can represent substantial savings over similar clean title cars, it’s wise to consider the risks:

  • Hidden Damage: Even quality repairs may fail to address all issues, leaving hidden flaws that lead to problems down the road.
  • Pre-Existing Conditions: Flood damage or electrical gremlins can resurface over time, resulting in safety issues and expensive repairs.
  • Lower Payouts: In a subsequent total loss, insurance settlements may only pay 80% of a comparable clean title car’s value.

However, the risks vary greatly depending on the vehicle’s damage history and who performed repairs. For example, a car rebuilt by a reputable shop after a single front-end collision carries lower risk than one hastily repaired after a major flood.

So while buying a rebuilt title car has risks to weigh, it can also net major savings with the right research and expectations going in.

Tips for Buying a Rebuilt Title Vehicle

If you’re considering a rebuilt title used car purchase, protect yourself by:

  • Getting a thorough inspection by a trusted mechanic to check for flaws
  • Researching the car’s damage history and repair details
  • Comparing insurance rates from multiple providers before finalizing your purchase

An informed buyer can find a safe, reliable rebuilt title car that saves substantially over a similar clean title option. However, it pays to enter the process with eyes wide open to the potential downsides.

The Bottom Line on Rebuilt Title Car Insurance

While insuring a rebuilt title vehicle can be more complex and expensive, having the right insurance policy helps make buying one viable.

The key is finding an insurer that offers appropriate coverage levels at a competitive rate. This may require checking with several providers, but the potential savings from the car purchase itself often makes the effort worthwhile.

So in summary – yes, you can insure a rebuilt title car, but shop wisely for coverage. And if buying one, conduct thorough due diligence to minimize surprises down the road. By following these tips, many rebuilt title car owners happily save money with limited issues.