What Is a Rebuilt Orange Title?by Scott Krohn
In Michigan, cars that have suffered damage that is deemed by the insurer as too expensive to repair in relation to the value of the car will be designated as “salvage vehicles” on an orange certificate of title. These cars are typically sold at auction and often end up being cannibalized for parts or sold for scrap. Some cars, however, may have damage that can be repaired. If the repairs pass inspection, an orange rebuilt title will be issued.
Michigan’s Definition of a Salvage Vehicle
A car will be tagged with an orange salvage title if it is defined as being both late model and “distressed." The State of Michigan defines late model cars as being either less than six years old and weighing less than 8,000 pounds, or less than 16 years old and weighing 8,001 pounds or more. To be deemed distressed, parts of the car -- including the frame, engine or body -- must be damaged to a degree that the cost of repairs will cost 75 percent to less than 91 percent of the value of the car prior to its being damaged.
Getting a Salvage Title Designation
In Michigan, an orange certificate of title for a vehicle indicates that the car was written off by an insurer due to major damage from an accident, being stolen and stripped, or from flooding. After being written off, also referred to as “totaled," the existing title will be canceled and replaced with an orange certificate that reads “Salvage," which makes the car illegal to drive on public roads. Regardless of any repairs or rebuilding efforts, the vehicle’s title will always show that the car had been designated as a salvage vehicle at one time in its past. To recoup a small portion of the insurance money paid out for the claim, in most cases the insurer will collect the vehicle and then sell it at auction.
Getting a Title Upgraded to Rebuilt Status
After purchasing a salvage vehicle at auction, the new owner may decide that cost-effective repairs and parts replacements can get the car upgraded to a rebuilt title, back on the street legally, and then sold for a profit. After the repair work is finished, the owner can pay $100 as of 2015 and make arrangements to have a salvage vehicle inspector examine the car. This involves checking for stolen parts used in the rebuilding process and ensuring the repairs on the vehicle pass the prerequisites of the Michigan’s Motor Vehicle Code. Upon passing this inspection, the title on the car can be upgraded to “Rebuilt-Salvage” by turning in the required paperwork, paying a $15 filing fee as of 2015, and paying all registration fees.
After the Upgrade to a Rebuilt Title
After the vehicle is upgraded to rebuilt status from salvage, the next step is to apply for a license plate so the vehicle can be legally driven on public roads. This street legal designation, however, does not represent any assurances that the vehicle is safe to drive or that all repairs have been done to factory standards. Prospective buyers of rebuilt title cars should remember that the State of Michigan prints those certificates in orange for one specific reason: to show that the vehicle has suffered major damage in its past and that related problems may occur throughout the rest of car’s service life.
After working for 21 years as a licensed adviser specializing in corporate and private finance, Scott Krohn began his writing career in 2008 covering a variety of topics including business, personal finance, health, and IT. He graduated from Cal State University, Long Beach with Bachelor of Arts degree.