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What Is A Salvage Title?

by Autobytel Staff
May 20, 2011

Any way you slice it, a salvage title is bad news. A salvage title means that a vehicle has suffered damage worth more than its value, and an insurance company has declared the car a “total loss.” The damage may come from collision, submersion, fire, and in some states, theft.  A permanent brand, the salvage title, was meant to identify the vehicle as unworthy for the road and a warning to any potential buyer. The salvage title ruins the value of any vehicle, and most insurance companies will refuse to cover any vehicle with a salvage title, for obvious reasons.

A salvage title is issued when the vehicle’s plates and original title are surrendered to the DMV. The insurance company takes ownership under the new title. The insurance company may sell the car to a wholesaler or auction house or allow the previous owner to buy back the vehicle if he believes the vehicle can be properly repaired. A repaired salvage vehicle may have its title modified, however. Some states, like California, will permit the California Highway Patrol to inspect the vehicle and certify that it has been repaired to a condition ready for the road. The new title will reflect the certification by reading “Salvage Rebuilt,” which may satisfy a driver who repurchased his vehicle from the insurance company, but he may face a difficult hunt to find another carrier who will insure the “Salvage Rebuilt” designation.

Every state sets different standards to declare a vehicle damaged. Some, like New York and Louisiana, call a vehicle salvaged if it receives damage equal or exceeding seventy-five percent of its value at the time of the incident. The State of Florida says an insurance company must declare the car a total loss before it issues the designation. No matter the state, a salvage title indicates a vehicle has endured some kind of severe damage.

Ideally, a vehicle with a salvage title would be retired from the road, used for parts and scrap, but often a vehicle with a salvage title shows no signs of damage. A car that has been under water and allowed to dry or one whose major damage may be masked by cosmetic repairs may present well. These cars can find their way across state lines and then re-registered through a wholesaler or auction house, and in that re-registration, the salvage title may magically disappear. The cars will populate lots where their bent frames and rusty floor boards will never been seen by naïve buyers dazzled by the holiday lights and bargain prices.

Rarely will a vehicle history report list the salvage title since the insurance companies and wholesalers are under no legal obligation to report the information. A car’s original clean title will appear on the report then be followed by a clean title from another state some years later. A gap in clean titles may indicate that the vehicle received a salvage title and had that brand washed by another state.

Does a Salvage Title Mean Less Value?

A salvage title can reduce a vehicle’s value by as much as fifty percent. These tremendous amounts will tempt some buyers into risking the purchase, but only a mechanic or a restorer with the skills and the experience to rebuild a vehicle completely should entertain the purchase of a salvaged title car. The brand is there for a reason. Everyday drivers should avoid it, and the professionals should respect it.            


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