What’s a rebuilt title?

Searching for a used vehicle and coming across cars with rebuilt titles? A rebuilt title could impact your car insurance coverage options. It’s important to understand what a rebuilt title is before you buy a used car to avoid overpaying for car insurance.

This article will serve to help you better understand what a rebuilt title is, how a rebuilt title differs from a salvage title, and what to do if you come across a rebuilt title when shopping for used cars

What is a rebuilt title?

A rebuilt title is a title on a used car that indicates the car has been restored to proper driving condition after being totaled. There are a few title classifications that you might see if you are searching for a used car which include:

• Clean title
• Salvage title
• Rebuilt title

A clean title vehicle is a car or truck that hasn’t been catastrophically damaged. In a perfect world, you’ll buy a car with this type of title knowing that it shouldn’t influence your car insurance in a major way and that it is less likely to have unforeseen issues.

What are the risks of a rebuilt title? Vehicles with rebuilt titles can sometimes be rebuilt with faulty parts or by shops that don’t adhere to manufacturer standards. In other cases, auto shops may simply miss some damage that resulted from an accident or other event.

In short, a clean title is considered much safer for drivers and insurance companies. For an insurance company, this means that you’ll likely pay more for insurance on a rebuilt vehicle title.

What is the difference between a rebuilt auto title and a salvage title?

Rebuilt title cars and salvage title cars are actually somewhat similar. In most cases, a rebuilt title car had a salvage title at some point. Basically, if a vehicle is classified as a total loss, an insurance company will deem it totaled. The car will then be registered with a salvage title. (For more information, read our “Auto Insurance Companies That Accept Salvage Titles“).

Salvage titles are problematic because you can’t typically insure a car with a salvage title. This classification means that the vehicle doesn’t meet the standards necessary for operation on public roads. So how does a rebuilt title differ?

A rebuilt title is distributed once a salvage title car is repaired to state expectations. This usually means that the vehicle will have to be inspected and pass a safety test to be considered operable. Once the vehicle earns a rebuilt title classification, it can then be insured and driven on public roads.

How can I find out if my title has been rebuilt?

Nowadays, it’s become a bit easier to find out if a title has been rebuilt. Most private sellers will inform prospective buyers when they are selling a car with a rebuilt title, salvage title, or no title at all. What happens if the seller doesn’t let you know?

There are a couple of ways to find out if a car has a rebuilt title. If you are planning on buying a used car, it’s helpful to review the title before finalizing the sale. If there are any major changes to the title, such as becoming salvaged or rebuilt, it will be listed on the title.

Other states make it even easier to determine if there have been any major changes to a title. In some states, titles will be of different colors depending on their classification. One common color coding scheme is as follows:

• Green – clean title
• Orange – salvaged title
• Blue – rebuilt title

It’s unclear whether every state follows the exact same color scheme or not, so it could be worthwhile to investigate your state’s title codes and colors.

What happens if I buy a car with a rebuilt title?

Buying a car with a rebuilt title isn’t the end of the world, but it isn’t ideal either. Why? As mentioned earlier, insurance companies tend to increase rates for rebuilt titles. Otherwise, your car’s value may also be less than similar models with a clean title.

There is speculation that your rates could increase by nearly 20% for a rebuilt title car, but there is limited evidence to support that exact value. What is clear is that insurance companies will likely be cautious when insuring your rebuilt title car and may even limit your coverage. Apparently, not all insurers will offer full coverage on a rebuilt title car.

If possible, it could help to figure out exactly what happened to your car prior to being rebuilt. According to the National Association of Insurance Commissioners, one of the common causes of rebuilt titles is flooding. Water damage could create lasting issues with the mechanical and electrical components of a car.

This is a good example of why auto insurance companies might hesitate to insure. Water-based damage can be hard to find and may cause a myriad of issues down the road. This is troublesome for both the insurer and the vehicle owner.

Simplifying What a Rebuilt Title Is

A rebuilt title car has been previously totaled but has since been repaired sufficiently enough to legally drive on public roads. Rebuilt title cars can be more expensive to insure and may not be eligible for as many insurance options as a car with the title status of clean.