How a Branded Title Can Affect Your Car Insurance Rates

If you’ve ever shopped for used cars, you may have come across vehicles with “branded titles.” These titles indicate that the car has sustained significant damage in the past. While branded title cars may seem attractive due to their lower prices, they can also lead to much higher insurance rates. In this comprehensive guide, we’ll explain what a branded title is, how it can impact your insurance, and when it’s best to avoid these vehicles altogether.

What is a Branded Title?

A branded title is a designation applied to a vehicle’s title by state motor vehicle departments. It indicates that the car has experienced major damage at some point. Some common branded title designations include:

• Salvage – The car was deemed a total loss by an insurance company after a crash or natural disaster damage

• Rebuilt – The car has been repaired after being totaled and has passed inspection to be road legal again

• Flood – The vehicle incurred significant water damage from a flood

• Lemon – The car was found to be defective and was repurchased by the manufacturer under lemon laws.

Branded title vehicles typically sell for much less than similar cars without branded titles. However, they come with increased risks and insurance challenges.

How Do Cars Get Branded Titles?

There are several common ways cars end up with branded titles:

• A car is totaled in an accident and the insurance company deems it a complete loss. The insurer then sells the salvaged vehicle at auction.

• A vehicle is damaged by flooding beyond economical repair. It is then issued a flood branded title.

• Under lemon laws, manufacturers must buy back defective new cars at the consumer’s request. These vehicles receive a lemon title.

• If a car’s odometer has been illegally tampered with, it receives a title branding it as having mileage discrepancies.

After extensive repairs, salvaged cars must pass a stringent state inspection before being retitled as “rebuilt” and sold again. But the branding remains on record permanently.

How Branded Titles Affect Your Insurance

In most cases, you can insure a branded title car. But coverage will likely be much more limited and expensive.

Insurers view branded title vehicles as higher risk. Since these cars underwent major repairs, insurance companies worry about lingering structural damage or mechanical problems arising later.

As a result, premiums for branded title cars are significantly higher. Many major insurers like Geico, Allstate, and Progressive may decline to cover them altogether.

Drivers often have the best luck obtaining basic liability policies from specialty insurers that deal with non-standard, high-risk auto coverage. But even these basic policies can be costlier than normal.

Factors That Determine Branded Title Insurance Costs

If you plan to insure a branded title car, several elements determine how much you’ll pay:

• Type of branding – A lemon title is less concerning than a salvage title from major collision damage.

• Extent of previous damage – Slight damage costs less to insure than a fully totaled and rebuilt car.

• Quality of repairs – Detailed repair records can provide peace of mind to insurers.

• Vehicle age and mileage – Premiums rise over time as cars age. But mileage may be falsified on cars with rolled-back odometers.

• Driving history – Good drivers with clean records get better rates, just like with normal title vehicles.

• Safety features – Anti-theft systems, airbags and other features may help lower costs slightly.

Thoroughly comparing quotes from different insurers is key to finding the most affordable coverage for a branded title car.

Tips for Finding Branded Title Insurance

Finding reasonably priced coverage for a branded title vehicle requires persistence and creativity. Consider these tips:

• Ask your current insurer if they’ll extend coverage to a branded car. Existing multi-policy or loyalty discounts can help lower premiums.

• Seek out non-standard insurers like The General or Direct Auto who offer high-risk policies.

• Raise your deductibles substantially to reduce monthly payments.

• Inquire about usage-based insurance where you only pay for actual miles driven.

• Take defensive driving courses that may qualify you for modest discounts.

• Maintain an excellent driving history free of claims, violations, and accidents.

When to Avoid Purchasing Branded Title Vehicles

Though you can usually find basic liability insurance for branded title cars, some situations call for caution:

• The title is marked salvage without being rebuilt. Most insurers won’t touch unrepaired salvage cars.

• There’s no documentation detailing previous damage and repairs.

• The car has serious existing mechanical issues unrelated to the branding.

• Repairs appear poorly executed upon close inspection.

Unless you’re an experienced car buyer, it can be challenging to fully evaluate branded title vehicles. Always have a trusted mechanic thoroughly inspect any branded car before purchase.

The Bottom Line

Branded titles can spell trouble when it comes to insuring your vehicle. While specialty insurers may offer liability policies, premiums are often sky-high. Collision and comprehensive coverage may not even be available. Carefully weighing the risks and insurance costs is crucial before purchasing a branded title car. For most drivers, paying more for a clean title car is the smarter choice.