A car may receive a rebuilt title if it’s damaged in a serious accident and then restored to an operable driving condition. If you’re planning to apply for a rebuilt title or thinking about buying a car with a rebuilt title, here’s what you should know.

What is a rebuilt title?

A car title is a document that includes important details about a vehicle, like who owns the car and whether it’s been damaged in any way. A car starts out with a clean title, which means it’s never been in an accident. It may receive a salvage title after it’s seriously damaged,^[1] and the car may receive a rebuilt title if the car is restored to working condition.^[2] Some states, like Massachusetts, may use different terms for rebuilt cars, such as “reconstructed.”^[3]

If your car was in an accident, your insurer will assess the car and determine if it’s a total loss based on repair costs.^[4] You or the insurance company need to apply for a salvage title, and if it’s later repaired, you could apply for a rebuilt title. The title may include the reason the car was rebuilt.^[3]

When Is a Car Considered Totaled?

How is a salvage title different from a rebuilt title?

A salvage title indicates the car is unsafe to drive following a major incident,^[1] but the car may receive a rebuilt title if it’s repaired to working condition and inspected. The title a car receives depends on the extent of damage and what’s been done to fix it.

When a car is damaged — whether it’s due to an accident, flooding, mechanical failure, or something else — an insurance company can label the car as a total loss. What happens next depends mostly on state law. The car may be considered salvage when its repair costs exceed its market value,^[4] and the state’s motor vehicle agency usually provides the salvage certificate after completing an application.^[5] A salvage title warns potential buyers that the vehicle has been severely damaged and is no longer safe to drive.^[4]

Depending on the extent of the damage, the car may either be repaired or sold for parts.^[6] A repaired vehicle may need to go through a state-mandated inspection, where a professional checks things like the vehicle identification number, the appraisal report, and the bill of sale to see if any major components were replaced. Depending on the state, the inspection may or may not focus on safety.^[7] After the inspection, you can apply for a rebuilt title, register it with your state motor vehicle agency, and either sell or drive the car.^[4]

Totaled Loss Car Insurance Settlement

How does a rebuilt title affect the value of a car?

Rebuilt title cars may be worth 20% to 40% less than a similar car with a clean title, according to Kelley Blue Book, a company that specializes in vehicle valuation.

That’s because “the car has had significant damage,” says Loretta Worters, vice president of media relations for the Insurance Information Institute. “There also may be undisclosed or unseen damage in a rebuilt vehicle, such as one that has been flooded.”

Other factors — such as the model year and popularity — influence the car’s value. “If there aren’t that many of that make and model on the road and it is a desirable brand, the value could be higher,” Worters says.

Things to consider before buying a car with a rebuilt title

If you’re weighing the decision of whether to buy a car with a rebuilt title, consider the following:

• Ask how the car was damaged. Ask the seller why the car has a rebuilt title, the extent of the damage, and how the car was repaired. For example, a car that was flooded could have extensive electrical damage. You’ll want to know if the entire electrical system was replaced and whether the parts were used or new, Worters says.

• Check the documents. Look over the documents from the mechanic, a copy of the inspection report, and proof of title status to make sure the owner followed the appropriate steps to get a rebuilt title.

• Ask a mechanic who specializes in rebuilt cars. Even if the car passed a state-mandated inspection, you can get a second opinion on whether the car is safe to drive. “It may look good, but there could be rusting or rotting on the body of the car that isn’t seen,” Worters says.

• Get an insurance quote. You’ll want to know whether you can get rebuilt title car insurance and whether the premium fits into your budget.

• Understand the resale value. If you think you’ll sell the car in the future, you’ll need to consider the lower resale value. You’ll also likely have fewer offers because some people aren’t comfortable driving a car with a rebuilt title.

Car insurance for cars with a rebuilt title

Insurance companies may issue a liability policy for a rebuilt title car but might not offer collision and comprehensive coverage. That’s because it can be difficult to establish the value of a rebuilt car. Additionally, the premium on a rebuilt title car may be 20% more expensive because of safety concerns.

“Insurers may find that, in the restoration process, issues weren’t addressed or certain procedures weren’t done, which can lead to dangerous situations on the road,” Worters says.

For example, if the car was misaligned, it can damage the suspension components — potentially resulting in expensive car repairs. Plus, driving the car at high speeds with a wheel misalignment can make it difficult to steer and increase the risk of an accident.

“If you can provide documentation from a reputable mechanic stating that the vehicle is in good working condition, that can help with rates or even getting full insurance coverage,” Worters says.

If you’re planning to get a rebuilt title for your car or you’re thinking about buying one, it’s important to get a quote for the insurance policy beforehand. Using a comparison platform can help you save time and compare offers.

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