You found the perfect used car for a great price. But when reviewing the vehicle history report, you notice it has a branded title. What does this mean and how will it impact your car insurance rates?
A branded title indicates that a vehicle has sustained significant damage in the past and was deemed a total loss by an insurance company. While these cars are repaired and made roadworthy again, having a branded title can make insuring them more complicated and expensive.
In this comprehensive guide we’ll cover:
- What is a branded title?
- How do branded titles get issued?
- Will insurance companies insure cars with branded titles?
- Factors that affect insurance costs for branded title vehicles
- Tips for finding affordable coverage
- When to avoid buying a branded title car
Understanding how a branded title can impact your auto insurance is important when evaluating these vehicles. Let’s take a closer look.
What is a Branded Title?
A branded title is a designation applied to a vehicle’s title by state motor vehicle departments to indicate it has sustained considerable damage. Common branded title designations include:
- Salvage – Vehicle was totaled by an insurance company
- Rebuilt – Previously totaled vehicle was repaired and passed inspection
- Flood – Car was damaged by water
- Lemon – Vehicle was deemed defective and bought back by manufacturer
Branded title vehicles tend to sell at significant discounts versus comparable clean title cars. However, insuring them brings added challenges.
How Do Cars Get Branded Titles?
There are a few common scenarios where vehicles end up with branded titles:
Major collision: If a car is involved in a major accident and declared a total loss by the insurer, it will receive a salvage title. This means the cost to repair it exceeds its remaining value. The insurance company typically sells these vehicles at auction.
Extensive water damage: Cars damaged by floods often receive a water damage branded title. Flood damage can cause electrical issues, mold, and rust.
Manufacturer defect: Under lemon laws, consumers can demand buybacks of defective new cars. The manufacturer takes these vehicles back and they are issued lemon titles.
Odometer rollbacks: If a vehicle’s mileage has been altered and falsely reported, it receives a title for odometer fraud.
Once repaired and deemed roadworthy, rebuilt and salvage title cars must pass inspection to be retitled and sold in most states. But the branded designation remains permanently.
Will Insurance Companies Insure Vehicles with Branded Titles?
In most cases, yes you can get insurance for a branded title car. But coverage may be more limited and expensive.
Insurers classify branded title vehicles as higher risk. There is concern about unrepaired structural damage or hidden mechanical issues arising later. As a result, premiums are often higher.
Many insurers will not issue collision and comprehensive coverage for rebuilt or salvaged cars. And major carriers like Geico, Progressive, and Allstate may decline to insure them altogether.
You’ll typically have better luck obtaining basic liability-only policies from specialty insurers that focus on non-standard auto coverage. But expect to pay more than on a clean title vehicle.
Factors That Affect Insurance Costs on Branded Title Vehicles
If you’re purchasing a car with a branded title, several factors determine how much you’ll pay for coverage:
Type of brand: A water damaged title is less concerning than a salvage title. Major reconstructed vehicles often have limited insurance options.
Extent of previous damage: A car with minor past damage costs less to insure than one that was completely totaled.
Repair documentation: Detailed repair records may help allay insurer concerns over past damage, potentially lowering premiums.
Age and mileage: Like clean title vehicles, insurance rates rise over time as cars age. But mileage may be harder to confirm on cars with rolled back odometers.
Safety features: Branded title cars with anti-theft devices, airbags, and advanced safety systems may qualify for discounts with some insurers.
Driving record: Just like with clean title cars, a good driving history with no accidents or violations will lower rates.
Finding the right insurer and policy requires careful shopping around. Securing quotes from several providers is key to getting the best rate.
Tips for Finding Affordable Branded Title Car Insurance
If you plan on purchasing a vehicle with a branded title, consider these tips to secure affordable coverage:
Ask your current insurer if they will extend a policy. Though major insurers often decline branded title cars, it’s worth inquiring. Having an existing policy with available discounts may help lower the rate if they do offer coverage.
Seek out non-standard auto insurers that specialize in higher risk vehicles. Companies like Direct Auto, The General, and Freeway Insurance are more likely to insure branded title cars.
Raise your deductibles. By accepting higher out-of-pocket costs in the event of a claim, you can reduce your premiums substantially. Just be sure you have savings to cover the deductible amount if needed.
Ask about usage-based policies. Insurers like Progressive offer plans where you pay based on actual vehicle usage. Driving less can lower your costs.
Take advanced driving courses. Completing defensive driver training shows insurers you’re committed to safe driving. Some may apply discounts for course completion.
Maintain a good driving record. Avoid accidents, traffic violations, and claims. A clean history helps earn you the best rates.
With diligent shopping, you can potentially find an insurer willing to offer liability coverage at a reasonable rate. But buying extra protection like collision or comprehensive coverage will be very expensive, if it’s offered at all.
When to Avoid Buying a Branded Title Vehicle
Purchasing a car with a branded title is risky. While you can likely obtain basic liability insurance, certain situations should raise red flags:
The title has a salvage brand. Major previously totaled vehicles often cannot be insured at all.
The car was damaged by flooding. Electrical issues and mold can linger and be extremely costly to repair.
There are no repair records or documentation on previous damage. Lack of transparency on past issues is concerning.
The vehicle has been poorly repaired. Watch for mismatched body panels, sloppy paint work, and other signs of shoddy repairs.
The car has existing mechanical problems or damage. Unrelated issues become more problematic on a branded car.
Unless you’re a knowledgeable car buyer, carefully inspecting and evaluating these vehicles is difficult. An experienced mechanic should thoroughly review any branded title car you’re considering before purchase.
The Bottom Line
Branded title cars can be insured, but often at higher rates. Their perceived risk due to past damage limits coverage options. Carefully weighing the benefits of a lower purchase price versus potentially expensive insurance is crucial when deciding on these vehicles. With extra diligence, drivers can find affordable coverage. But for most, sticking with clean title cars is the safer choice.
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