How to Insure a Car with a Salvage or Rebuilt Title

Salvage titled or rebuilt cars are cheaper than your average used car, but insuring them is more complicated

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Are you scanning the market for a used vehicle to buy? If so, you may have come across cars marked with a save either rebuilt title. These designations indicate that the car sustained significant damage in a previous incident, based on an assessment by the previous owner’s insurance company.

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However, if you’re interested in getting a great deal, these vehicles can be attractive, especially if the damage is mostly cosmetic. Salvage title or rebuilt cars typically sell for substantially less than your average used car.

However, the purchase of this type of vehicle also has some drawbacks, one of which is the greater difficulty in acquiring insurance coverage.

Here’s how to secure a salvage or rebuilt title car.

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

A salvage vehicle has been considered a “total loss” by a licensed insurance provider after a collision, natural disaster, riot, or other incident. This means that the cost to repair the car exceeds, or is at least close to, its market value. As a result, it is not worth the insurance company to cover the damage.

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You cannot register, drive or insure a vehicle with a salvage title in Canada until it has been repaired, inspected and found safe, in accordance with the Canada Insurance Bureau. And unless you do the necessary work to restore it, the salvage title remains intact indefinitely.

A rebuilt title car is one that was initially assigned a salvage title, but has undergone extensive repairs and passed a rigorous inspection to ensure it is safe to drive.

The regulatory standards that a salvage vehicle must meet to obtain a rebuilt title vary from province to province.

Something like New Brunswickkeep a close eye on the minimum national level requirements established by the Canadian Council of Motor Transport Administrators (CCMTA). Instead, others, like albertathey have their own unique rules.

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Any vehicle that qualifies for a rebuilt title can be legally registered, driven and insured, and its rebuilt status never expires.

How does a salvage or rebuilt title affect your insurance?

Getting insurance on a rebuilt salvage title car can be tricky. Some insurance providers may be hesitant to cover these vehicles, given the increased risk and uncertainty they cause.

First, they may be concerned about hidden flaws that mechanics may have missed during the restoration process, particularly those related to safety. These obscure issues could make driving the vehicle more dangerous than it seems, increasing your risk of filing a claim after a collision or other serious incident.

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Second, there is a risk that the vehicle will sustain further damage in the future, as its structural or mechanical integrity is already compromised, making it more likely that it will break down again.

Third, determining the value of the car, which tends to plummet once you inherit the salvage title, can be a formidable task for an insurance company. The provider may decide that it is more prudent to decline coverage altogether, as accurate assessments are crucial in estimating insurance payments.

Suppose you get approval for a policy. In that case, your insurance provider may assign you a higher annual premium to offset the additional risk you take on insuring a rebuilt-title car.

While it’s still possible to get a favorable rate, you can expect a lower payment if you file a claim, given the car’s greatly reduced value.

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Also, your insurance provider may offer only third party liability coverage in your policy, or the minimum required by law in your province. You may not be eligible for collision or comprehensive coverage.

What to do if you plan to insure a car with a salvage title

Getting insurance coverage for a rebuilt salvage title car isn’t easy, but you can greatly improve your chances of landing a solid deal by following these tips:

  • Get the original repair estimate for details on previous damage (with photos) and work done to restore the vehicle.
  • Select a reputable, licensed repair shop to repair the vehicle and keep all receipts as proof.
  • Have your vehicle thoroughly inspected by an experienced mechanic to confirm that it is safe to operate.

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  • Get an independent appraisal so you can judge if an insurance company’s stated value is fair.
  • Consider the potential consequences of having only third-party liability coverage.

Salvage and rebuilt cars typically have a low resale value, so if you’re interested in buying one, wait to drive it until it completely falls apart.

For this reason, it is also advisable to compare prices and compare auto insurance rates from multiple insurance providers — that way, you won’t have to carry a hefty premium for years to come.

LowestRates.ca is a free, independent rate comparison website that allows Canadians to compare rates from over 75 providers for various financial products, including auto and home insurance, mortgages and credit cards.

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