Buying a rebuilt car title can be a tricky process. There are many variables to consider when buying one, and it's important that you understand the risks before making your purchase.

You can plan on insuring salvage cars or get insurance for rebuilt titles to protect you and your investment in case something goes wrong down the line.

Let's know how cars with salvage titles and rebuilt titles are different from each other and what you need to know about them if you plan on purchasing one.

Key Highlights
  • The meaning of a rebuilt title or salvage title varies depending on the state in which you live.
  • Most states require the vehicle to undergo inspection before it is allowed to return to the road.
  • Before buying a car with a rebuilt title make sure you check if the car can be insured with your current insurance provider.
  • Many auto insurance providers don't offer insurance for vehicles with rebuilt titles.

What is a rebuilt title?

A good general definition for a rebuilt title (used by CarFax and others) is:

A "rebuilt title" is placed upon a rebuilt or reconstructed vehicle that previously was a salvage vehicle but has now been repaired and restored to operation.

These vehicles are often severely damaged before they are rebuilt and refurbished parts are typically used during reconstruction. In most states, an inspection of the vehicle is required before the vehicle is allowed to return to the road.

Rebuilt title vs Salvage title

Normally, a car becomes a salvage vehicle after an insurance company has declared it to be a total loss after an auto accident. The total loss threshold, or formula used to determine if a car is totaled, varies by state. Once totaled,  it then can be sold ("AS IS") to an automobile rebuilder to be used either for parts or to be restored.

In general, a salvage vehicle cannot be driven on the highways or have a valid license plate.  A salvage vehicle must be repaired (if that is possible) to become a rebuilt, roadworthy vehicle.

If a car with an old salvage title is repaired, it will be given a rebuilt title. However, it needs to go through inspection before being deemed safe for the road - but once it passes the safety test, you'll have another reliable vehicle.

How does a car get a rebuilt title?

Some insurance providers sell the salvage vehicles to the third party who either repair or dismantle it. If the salvage vehicle is repaired, it is then given a rebuilt title. It undergoes inspection before the vehicle receives permission to get back on the road. 

Should I buy a car with a rebuilt title?

It's always dicey to buy a car with the rebuilt title as it comes with its own set of risks. You never know what you're going to get, and it could end up costing much more than buying one with no history at all.

However, if everything goes well and nothing terrible happens along the way, it can prove to be a good investment.

Pros and cons of buying a car with a rebuilt title

Buying a car with a rebuilt title might not be such a bad idea. It has its pros and cons and some of them are mentioned below:

Pros:

  • It costs less: A rebuilt title car costs much less than a car with the clean title of the same model.
  • Manageable damages: The car may have repairable damages and if you have enough money in savings and are willing to put up with an old car that's structurally sound, it might be worth a shot.
  • Affordable temporary solution: If you need a car for a short period and are not willing to invest a good sum of money in buying a new car, the one with the rebuilt title can be a helpful temporary solution.

Cons:

  • Possible hidden damage: It may have hidden damages that weren't apparent during the initial inspection. Things can go wrong with a vehicle, even if it appears perfect on paper and in person.
  • Difficulty in getting insurance for rebuilt title: A rebuilt title can make it difficult to get insurance and may even lower the price of your car.
  • Not easy to sell: You may have a hard time selling your car with rebuilt title. Even if you succeed in selling it you may not be able to make any big profit.

How much does rebuilt title affect value?

A car with a rebuilt title is typically worth 20 to 40% less than the similar model with a clean title. However, the exact price will depend on many factors including the model and what kind of damage it sustained.

Can you get insurance for a rebuilt title?

You can get rebuilt title insurance, but it is tough to find insurance carriers who are willing to provide coverage for cars with a rebuilt salvage title. Insurance companies often charge rebuilt title vehicles with a higher premium than for the same coverage on an un-salvaged vehicle or a vehicle with a clean title.

Can you get full coverage on a rebuilt title?

It is possible to get full coverage insurance for a rebuilt vehicle, but there are only a few insurers who will issue full coverage for a rebuilt car title.

Insurance providers only offer liability coverage to vehicles with a rebuilt title and so it's not going to be easy to find an insurer who will also include comprehensive or collision coverage on the policy. But if you're willing to do a little bit of research you may be able to find something.

Guidelines for rebuilt vehicles vary

If the vehicle is restored, in many states it must be inspected and ultimately a "rebuilt title" can be issued for the vehicle from the state’s Department of Motor Vehicles (DMV). A reconstructed vehicle with a rebuilt title CAN be driven on the highways. The guidelines for getting a rebuilt title vary by state.

For example, the state of Florida requires a vehicle to have a salvage title if the insurance company declared the vehicle a total loss. These titles generally indicate whether the vehicle is "rebuildable" (can be repaired and driven) or "not rebuildable" (must be sold for parts).

In some other states, they “brand” or mark the vehicle's title when the estimate of damages reaches a certain percentage of the vehicle's retail value (New York and Louisiana, designate it at 75%).

The rules can be complex for rebuilt and salvage vehicles.

For example, the Georgia Department of Revenue notes that anyone who purchases a salvage or wrecked motor vehicle for the purpose of restoring or rebuilding it must be licensed as a rebuilder.

In Nevada, vehicles that have had certain repairs must be titled as rebuilt even if they don’t meet the definition of a salvage vehicle.

This applies to any vehicle that has had one or more of the following major components replaced:

  • Cowl assembly
  • Rear clip assembly
  • Roof assembly
  • Floor pan assembly
  • Conventional frame coupled with one additional major component
  • Complete front inner structure for a unibody

Before purchasing a rebuilt vehicle, it should be thoroughly checked out by your own mechanic. You also should check to see if the car can be insured with your current insurer since their underwriting rules may not allow them to write policies for cars with salvage or rebuilt titles.

Many auto insurance carriers simply don’t offer policies for rebuilt cars. Or, if a policy is offered, it may be only for liability and not all types of car insurance such as collision and comprehensive coverages because it’s too hard to determine a rebuilt car’s true value.

If you purchase a vehicle with a rebuilt title you’ll have to shop around and compare car insurance rates to find the right car insurance company for your needs. Look for insurers, such as Progressive, that allow full coverage on cars with branded titles.

Our guide on how to insure a rebuilt title car has more details on how to get coverage and on companies that sell insurance for rebuilt title cars.