Insurance For Rebuilt Or Salvage Tiles – What Enthusiasts Need To Know
Enthusiasts have long has a very different relationship with rebuilt or salvage titles than general public. From cheap and inexpensive race or track car builds, to the opportunity to by a dream car for less than the cost a perfect collectible example, rebuild and salvage titles can provide an excellent opportunity for enthusiasts. Rebuilt and salvage titles are more than just a way to get a car for cheap, it’s a gateway to what we love.
Yet, when it comes to registration and insurance, there are a number of potential pit falls and things to be aware of. And many owners by salvage title and rebuilt title cars without understanding what could be involved. Worse, terminology can vary between states and even the subject to less than scrupulous sellers.
Like many complicated topics, there can also be a of misinformation, or occasionally even outright bad advice, online about the insurance, titling and registration process for salvage and rebuilt vehicles. Advice from someone located in a different state than you may not be invalid. Also, what works for traditional insurance companies may be very different than what works for track day insurance or specialty insurance like a collectors policy.
You may also be asking yourself right now, if you don’t plan to register it for the street, what does any of this matter? Well if you plan to buy any kind of insurance, including track day or storage, on trailer and paddock policies, you may want to keep reading. Because this isn’t just about resell value, registration or on street insurance.
In this blog post we’re going to hit on these topics as they specifically relate to replica and salvage titles. Our goal with this blog post, as with all of them, isn’t to provide a step by step guide or direct insurance advice. But rather, to help you come up with questions to ask and think about before taking the plunge on one of these cars.
But if there is one thing we want you to take away from any insurance post: Everyone’s insurance situation is a lot more unique than they think, and most states have slight variations to their salvage and rebuilt title and/or registration process. Different types of insurance have different ways of handling salvage and rebuilt titles as well. Making assumptions based on other peoples situations can lead to challenges.
A Primer – Terminology Of Rebuilt and Salvage Title
Before we go any further into discussing the potential insurance or even registration impact, let’s talk terminology. Like so many things, terms are often used differently so relying purely on the term “rebuilt” or “salvage” may not be sufficient depending on your state or situation. And since your insurance carrier may not tailor their terminology to your states definitions, let’s talk about what these terms generally mean.
Our recommendation is regardless of whether you are referring to your states titles process, another states titles or taking to your insurance company. Focus on on the meaning behind the term, rather assuming terms are the same.
Alright, let’s talk about what we’d consider the “standard” high level definitions of these terms. Then we’ll dive into some of the potential variations. Again, your specific state may NOT use these terms for the various states of titles. This is just what we’d considered the non-DMV definitions to be.
Salvage Title – A title for a vehicle that has been declared a total loss In most situations a salvage title vehicle has not been certified or reconditioned allowing it to be registered. However, it does not necessarily mean the car hasn’t been fixed in some way.
Rebuilt Title – a title for a vehicle that has been declared a total loss, but has been reconditioned with the expectation of being used or resold as a street driven vehicle. Just because a car has a rebuilt title does not mean it necessarily has been or has to be registered, just that it’s generally in a state where it could be. In many states this may require the extra step of being “certified” or “inspected”.
Variations In Title Names
While more and more states are standardizing on the title definitions, there are a few exceptions. California being one of the most well known, however, the may be others. Again, our recommendation is to not focus on the name, but rather whether the type of title is salvage (not reconditioned) or rebuilt (reconditioned) for the state the the title is currently in.
Salvage Certificate – is the equivalent of a Salvage Title as described above.
Revived Salvage Title – is the equivalent of a Rebuilt Title as described above.
Rebuild Title Process And Gotchas
A significant number of states will require some kind of inspection or certification that a salvage title vehicle has been properly restored before allowing it to be registered. As noted above, this is commonly referred to as a Rebuilt Title. For example, in our home state of Georgia you’ll need to have the vehicle repaired by a certified rebuild specialists, or have a certified inspector sign off on the rebuild following an inspection. In some states the inspectors work for the state, in others, like here in Georgia they are licensed shops. The process can be difficult and the inspectors carry a lot of liability for too easily approving the rebuild so expect the process to be detailed.
On the other side, when buying a vehicle with a title from a different state than yours, research that states rebuild and salvage title names and process. As you can see from the variation of the name, you may be buying a vehicle with a title with “rebuilt” in the name, when it’s a salvage title in your state and in the eyes of your insurance company.
Also keep in mind some states may have easier rebuilt title inspection processes. The good news is most states have closed loop holes that would allow someone to get a rebuilt title with no inspection or proof of reconditioning.
Some states may still require an inspection even if you get a vehicle with a reconditioned title from another state, so check with your state for the specific process.
Insurance Salvage Or Rebuilt Title Vehicles
Getting insurance for a salvage or rebuilt vehicle can vary depending on the carrier and situation. For the scope of this article we are going to focus on unique situations enthusiasts may deal with. If you are reading this article looking for information about how to get insurance for a salvage or rebuilt title for an every day, business or utilitarian uses while the information may still be applicable, those uses are beyond the scope of this article.
We’ll use our definition of the titles. If your states title names are different and didn’t reach the sections above, we’d recommend doing so.
Salvage Title Insurance
While the demand for Salvage Title vehicle insurance isn’t as strong as for rebuilt titles since they generally are not in a state they can be registered it doesn’t mean there are cases where you may find yourself wanting to protect the vehicle. Salvage Titles vehicles are useful as project vehicles, particularly for rare or specialty trims or model vehicles that would otherwise be unavailable or unaffordable with clean titles. Salvage titles vehicles also make great donor vehicles for kit cars, though we’d generally recommend considering the proper way to title your kit in your state. And of course, the one we probably deal with most – for dedicated track or race cars they can be a way to get a vehicle for less money, including some high end track car models.
Since Salvage Title vehicles typically cannot be registered, most insurance companies will not offer liability or street driven coverage for these models. Your experience may vary, but agreed value or specialty carriers in general will often limit the type of coverage. Also, you may find most will want pictures or other details to ensure they are not taking on a vehicle with unrepaired damage. For enthusiast or collector companies expect the vehicle to need to be in appropriate condition when it has a salvage title.
However, that doesn’t mean there are no options.
Race or Track Cars
For race cars many carriers who offer storage, trailer and paddock (also sometimes known as “off track”) policies. There are carriers will offer agreed value coverage for race or track cars that are trailered only but have a salvage (non-reconditioned) title. These policies are generally very inexpensive depending on the value of the vehicle.
As with all salvage title insurance based on the value of the vehicle, expect the insurance carrier to want to align the value to the market or replacement value of salvage title vehicle, not a clean title vehicle.
One other thing to note is that some track day carriers typically do not want to insure salvage title vehicles. So if you buy a salvage title track car and buy track day insurance, check with your agent or track day insurance carrier of choice to ensure they will accept your salvage title. Also, since most track day insurance is stated value or agreed limit, be sure to adjust the insured value to properly reflect the value of the vehicle as a salvage title.
Project Cars
Salvage titles can make great long term projects. This could be anything from buying back your own title after a favorite car is considered a total loss, a cheap way to get into a vehicle that otherwise could be unaffordable or just simplify an opportunity. While running and driving projects can be challenging to cover with salvage titles, many of the same carriers that will cover kit cars or race cars will often also consider covering nonrunning projects or providing “comprehensive only” coverage for non-running projects, even if it has a salvage title.
Keep in mind your states requirements for rebuild process and inspection. It can be frustrating to put a lot of effort into repairing a salvage title vehicle just to have the state inspectors turn you down for rebuilt title because they don’t accept your work. While not directly an insurance issue, if you hope to one day register and drive the vehicle it’s certainly a dependency to getting to the point of insuring it for street use.
Kit Cars
Salvage title vehicles can be an option for those who are building kit cars that require a donor vehicle, like Exocets. While we discuss how to get a title using the kit’s documentation, rather than the donor vehicle, which may streamline insurance questions in the event you do get get a title for your kit using a donor VIN and title you may run into challenges.
However, when using the documentation for the kit car or if your state has an inspection for kit cars, your vehicle may qualify as a “rebuilt” vehicle. We’d recommend checking with your insurance agent or your carrier if you are using the VIN and title from a donor vehicle if it’s salvage. If you don’t and you have a claim, you could potentially have issues.
Uses That May Be More Challenging
Parts Cars – while a parts car in good shape may be eligible for some level of coverage, most insurers if they knew the vehicle was salvage and intended to be stripped for parts would not likely want to insure the vehicle or may created issues at the time of a claim. For professional companies and businesses coverage may be available for parts cars, but that is well beyond the scope of this article.
Rebuilt Title Insurance
Getting insurance for a rebuilt title, those that have been reconditioned and inspected (where required) is generally easier. Still, not all carriers will take rebuilt or salvage title vehicles and the value of the vehicle will likely need to reflect it’s status. Still, rebuilt title vehicles can be great options for enthusiasts for a lot of reasons we’ve mentioned – cheaper vehicle to get into that may become a track or race car, opportunity to purchase a car like an collectible or exotic that would otherwise be unattainable or unaffordable otherwise, or just simply a chance to get a desired enthusiast vehicle for less than the going market rate.
Of course, for any specialty enthusiast or collector insurance program you shouldn’t assume that a rebuilt title has no impact. First, it u’ll want to ensure the value is properly reflected. IT could cause issues in the event of a total loss claim otherwse.
Here are some common ways
Race or Track Cars
Since most traditional insurers don’t really want race or track cars to begin with, enthusiast and collectors insurance is typically the go to move for track and race cars anyway. Whether street driven or trailered only, there are a couple of track and race car friendly specialty insurers. Most will accept a properly inspected and reconditioned rebuilt title race or track car. Still, not all will and not all companies, particularly collectors insurance, will take track and race cars.
As with all rebuild title insurance based on the value of the vehicle, expect the insurance carrier to want to align the value to the market or replacement value of rebuilt title vehicle, not a clean title vehicle.
One other thing to note is that some track day carriers typically are fine with properly reconditioned and rebuilt titled vehicle. So if you buy a rebuilt title track car and buy track day insurance, you may want to consider checking with your agent or track day insurance carrier of choice to ensure they will accept your rebuilt title. Also, since most track day insurance is stated value or agreed limit, be sure to adjust the insured value to properly reflect the value of the vehicle as a rebuilt title.
Kit Cars
Rebuilt title vehicles can be an option for those who are building kit cars that require a donor vehicle, like Exocets. While we discuss how to get a title using the kit’s documentation, rather than the donor vehicle, which may streamline insurance questions in the event you do get get a title for your kit using a donor VIN and title you may run into challenges.
High Value Or Collector Cars
Exotics and high value collector cars are another common place enthusiasts may find themselves considering a rebuilt title. After all, rebuilt titles can easily be 15-30% cheaper than clean title examples, potentially even more for some models.
Like the other situations, typically carriers that will accept exotics and rebuilt titles or offer collector coverages will consider these vehicles. Specialty insurers are likely still the set place to find the combination of will accept rebuilt titles and will still agree to a value that is inline with these higher value vehicles.
In fact, a rebuilt exotic or collector car may given you even more reason to go with an agreed value company. ACV policies often undervalue collectors and enthusiasts vehicles, both with or without mods. They may be even more likely to do so for exotics and high and rebuilt title models where theri systems may not have enough relevant examples to provide comparables for establishing a value. This could lead to a protracted claims cycle getting to a fair value that both parties can live with.
Other Title Issue Scenarios
While we don’t plan to go into detail on these, here are a few other scenarios enthusiasts may find themselves dealing with that may impact insurance but may not be specifically related to rebuilt or salvage titles.
Lost Title/No Title
While value hunting for rare, enthusiast, collectible vehicles – whether track or race car, or just a car you’ve always wanted, you may come across a vehicle with a lost title. For trailered only track or race cars, many enthusiasts may dismiss a lack of title. However, if you intend to buy insurance – whether a storage, trailer and paddock policy or track day insurance you may find yourself in an interesting situation if you have a claim. While some carriers will allow you to provide alternative forms of proof of ownership, you should ensure your carrier of choice will accept what you have. Otherwise, you may find yourself with a challenging claims process.
If you want to register a vehicle, unless the age of the vehicle is older than what is required for a title in your state, you will need to replace the title. Most states have a lost or missing title process in the current title holder. It typically involves getting the vehicle VIN inspected, getting verification it wasn’t stolen or has liens and getting a title bond to indemnify the state and the legitimate title holder in the event there is any misrepresentation. The full process is beyond the scope of this blog post and varies by state, but if you want an idea of what the process is like you can check out our article on obtaining a lost title. It’s based on on our home state of Georgia, but shoold at least give you an idea of what to expect.
Of course lastly, some purpose built race cars, certain kit and replica car packages which haven’t ever been registered, trailers and other vehicles may not have or qualify for a traditional title. Often time certificates of origin or other documentation provides the proof of ownership and the ability to sign “title” over for insurance purposes. For some things like trailers and purpose built race cars these are fairly straight forward, but if you are unsure we always recommend checking in with your insurance agent or carrier with your specific situation.
Shared Title, LLC Or Trust Owned Titles And Vehicles Registered In Other States
Other common titling scenarios you may experience as an enthusiast that relate to insurance, but may or may not relate to rebuilt titles but when combined with those can potentially limit your options or can lead to challenges in the event of a claim if that properly setup and places with an appropriate carrier and policy.
Shared Titles
While husband and wife situations are pretty straight forward, when dealing with members of different households and non-direct relatives you should talk to you carrier or insurance agent about your situation. Issues regarding insurable interest could cause issues at the time of a claim if the policy is not properly setup to align tot he title ownership.
We see a number of these with shared track cars and can impact street driven insurance, off track and track cay insurance.
For situations where they could be liability, both on street and on track, there may also be additional considerations to avoid potential personal exposures for shaed title vehicles. These are best discussed with a licensed insurance agent.
LLC Or Trust Owned Titles
It’s becoming increasingly common for enthusiasts and collectors to turn to LLCs and Trusts to title their specialty and high value vehicles. Whether in your home state or another, trusts and LLCs provide tools that allow ownership to be shared and transferred with more structure and with potential liability and and other benefits. However, many traditional insurance companies and even a number of specialty insurers may not be setup to support this. Also, not all ownership and LLC situations are universally accepted even by the companies that do allow these types of ownership interests. If the LLC or the vehicle is active in business uses that may further complicate the options. And tall that i before considering which companies will take rebuilt or salvage title vehicles.
In order to ensure your carrier accepts your situation and the insurance policy, particularly for personal enthusiast, collector or traditional insurance, we recommend talking to an insurance agent that specializes in these situations.
This is particularly important if the LLC or trust is in another state. Insurance follows the state of registration in most cases, so having someone who is licensed in the state of the LLC if different than your residence state is vital.
Conclusion
Titling and ownership is a fundamental topic of a properly aligned and setup insurance policy. Rebuilt and salvage titles heighten the need to ensure you have a policy and carrier that is aligned to the type of title or ownership your enthusiasts vehicle has. Too often enthusiasts and even carriers and agents take these issues at face value with little regard for the challenges it could cause at the time of a claim. This is particularly true when it comes to non-street use coverages like track day insurance where owners may not even suspect there is a challenge.
It’s even worse when a lost cost salvage vehicle is enhanced and modified for track, race or show purposes that creates an enhanced value but may not be eligible for coverage because the owner didn’t do their due diligence before buying insurance that was incompatible with the type of title the vehicle had. Worse, many agents and “internet experts” may not realize that what works for some situation or certain types of policies may not work for others like track day insurance.
Informational Purposes Only
Every insurance blog post, including ours, always has a disclaimer. Always read your policy carefully. Despite this warning, so many people fail to do this. Just like Software License Agreements and Terms of Service, people tend to breeze through these legal contracts with little regard for what’s included. It’s pretty typical, but the risk of doing so is more than just the possibility of disappointment, it could cost you money. Lots of money.
Of course, we have to say it – what is or what is not covered is defined by your policy, not by what you read on the internet, heard in the paddock or were told by a friend who also has a rebuilt title car. Our goal here isn’t to give you list of what is or isn’t possible with your insurance carrier or agent, just to give you some things to think about as you consider buying, building or assembling a kit or replica car. We hope you’ll use these topics to ask questions and engage the help of licensed insurance professionals to get questions about your specific situation answered.
