What is a salvage title? What is a rebuilt title?
A salvage-title vehicle has been declared a total loss by an insurance company and usually cannot be legally driven on the road. Once the car has been repaired and declared roadworthy, it will get a rebuilt title.
The amount of damage needed to declare a vehicle a total loss varies by state law, and ranges from 50 percent to 95 percent of the car’s value. In “total loss” states, each insurer decides when to declare a total loss.
There are several types of total-loss declarations. Some states have a “junk,” “scrap” or “dismantled” designation that prevents the most heavily damaged cars from being rebuilt and retitled. Some will issue flood- or hail-specific salvage titles. Eleven states issue salvage titles to stolen vehicles: Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma and Oregon.
The exact definitions and terms vary by state, and many people use the terms interchangeably. Sometimes you may hear a salvage title or rebuilt title referred to as a “branded title.”
Any used-car purchase should include a check for branded titles. You can check for a salvage or theft report for free with the National Insurance Crime Bureau. For a minimal cost, you can uncover a wider array of title defects through affiliates of the government-run National Motor Vehicle Title Information System. Services such as Carfax and AutoCheck include registration, emissions and recall information as well.
Can a rebuilt title be changed to a clean title?
Not legally. Crooks take advantage of the patchwork of state laws to “wash” car titles, retitling cars in states that don’t have an equivalent designation.
But if you’re willing to live with a branded title, a damaged car can be repaired and put and put back on the road.
A salvage declaration is usually an economic decision as well as a safety one. Insurers declare a car to be salvage when repairs don’t make financial sense. For newer cars, that circumstance might come from flood or hail damage. On an older car, a fender-bender could be enough.
Some states have a “junk,” “scrap” or “dismantle” designation that prevents badly damaged cars car from being retitled.
Vehicles between these extremes often wind up in the classified ads. Even if the seller discloses the branded title, buyers have no easy way to verify what kind of damage was done and how well it was repaired. Some cars can be “clipped” -- a front end and a rear end from different cars joined together.
Most states require that a car with a salvage title undergo an inspection before it receives a rebuilt title. In some cases the inspection is a cursory checklist for turn signals and headlights that would not uncover any underlying safety issues.
You would be wise to have a mechanic of your own choosing inspect it, too.
How much does a rebuilt title affect the value of a car?
Most experts say a car’s value diminishes by 20 percent to as much as 70 percent compared with a clean title.
That difficulty in pinpointing value makes banks reluctant to finance a branded-title car, and insurance companies shy away from offering collision and comprehensive coverage.
There’s no formula or set amount for determining the effect of a branded title; a car is only worth what a buyer is willing to pay. Much depends on the kind of damage that a vehicle has incurred, and how well it has been repaired.
Can I get insurance coverage on a rebuilt-title car? Will it cost more?
Liability insurance covers those you hit, so the cost isn’t affected by the status of your car’s title.
But you may find full coverage insurance more difficult to find. Some companies simply won’t bother with a branded-title car. The value of the car is difficult to pinpoint, and that makes some insurers reluctant to offer collision and comprehensive insurance that would cover the cost of repairs.
If you do find an insurer willing to write a policy -- Progressive is known to offer full coverage on branded title vehicles -- the cost should not be higher. The diminished value from a rebuilt title means the insurance company isn’t taking any additional risk if your car is totaled (again).
Can I buy back my totaled car?
Usually, a car that has been labeled salvage is sent to an auction, where it is sold for parts. The insurance company keeps the proceeds because it has already paid you for the car’s pre-crash value.
Some owners want to repair their damaged cars, though. If you let your insurance company know quickly enough-- before the car is sent to auction -- it can deduct the car’s salvage value (what it might have brought at auction) from your settlement and let you keep the car.
You would still need to repair the car and have it inspected, and the car would always carry the branded title, greatly diminishing its remaining value. You might also have a difficult time keeping full comprehensive and collision coverage on it.