7 Major Reasons Why A Car May Have a Salvage Title

Cars with salvage titles

Even fully restored cars may end up as salvage titles because insurance companies were reluctant to insure them or that they did not pass state inspection to receive a re-titlement.

Salvage titled cars are cheap. Even ones restored to mint condition command only 60 percent the price of their clean-titled counterparts. However, the term ‘salvage’ puts off many potential buyers as many think it implies a car that is totally wrecked and hence, unlikely to be insured. The reality is that a vehicle may have a salvage title for several reasons. Here we discuss the 7 most likely reasons a car may have a salvage title:

1. The Car is Totaled

Yes, you might have guessed the first reason right, but totaled doesn’t always mean that the car has been reduced to a piece of junk. It implies that insurance companies deemed the costs of repairs to be higher than a set percentage of the car’s value. In most U.S states, the standard limit is 75 percent. In such cases, the insurance companies find it more viable to find a replacement vehicle for the insurer instead and sell off the totaled car at an auction.

True, some of these ‘totaled’ cars do fit the bill of one imagination, being completely wrecked. But most are not nearly damaged enough not to be a potentially good investment. Since they can be so cheaply brought, by doing the repairs yourself, you can even make a profit by reselling them.

2. The Car was a Victim of a Natural Disaster

Floods, hurricanes, forest fires, tornados, earthquakes, and so on– the U.S experiences nearly every type of natural disaster out there. When they occur, especially in major urban centers, the aftereffects can overwhelm the insurance system. In many cases, the insurance companies may see it as more convenient to seek a replacement vehicle than find the original and do an extensive inspection of it. Many of such vehicles recovered after a natural disaster don’t necessarily suffer from much damage, but are given a salvage title as a safety device.
Unlike other salvage autos, damages are harder to detect on such cars. When out buying, be sure to ask the dealers about the history of the car, or alternatively check it yourself by using the Vehicle Identification Number (VIN).

3. The Car is a Theft Recovery

Unfortunately, within the States, auto theft is quite prevalent. According to the National Insurance Crime Bureau, around 156 vehicles are stolen in American every single day. If the police authorities are unable to recover the stolen vehicle within a set number of days, usually 21 to 30 days for most states, the insurance company may write it off as a total loss and replace it for the owner. If afterward, the stolen vehicle is recovered, it is sold off to a dealership.

Theft recovery salvage cars are often the best purchase options. They can be quickly made roadworthy, not only because they often don’t require much in terms of repairs, but a simple safety inspection by a state-authorized repair shop or officer is usually needed for re-titling.

Pro-tip: Re-titling can significantly improve the value of the car. If you are thinking of reselling a theft recovery vehicle, have it re-titled beforehand.

4. The Car Has Not Yet Been Re-titled

Occasionally you may see fully restored roadworthy cars with a salvage title. While it could imply that the vehicle did not pass the state-mandated inspection, it could also imply a simple case of ignorance of the law by the owner. Still, it is important to ask exactly why the car has not been re-titled yet and have a mechanic do some inspections themselves. If a deal is too good to be true, it could be that the dealer is trying to hide some information about the salvage car.

5. The Car is a Replica

Kit cars, or personally made replica of famous cars, are a thriving hobby industry here in the States. Buying such cars presents its own charm and challenges. For some car enthusiasts, its history and uniqueness carry sentimental appeal. However, many of these cars end up as salvage titles even if they suffer from no damage, because insurance companies were reluctant to insure them or that they did not pass state inspection to receive a road-worthy title. Be aware that you may not be able to drive such vehicles on the road in some states legally.

6. The Car is Too Modified

A car which has had a substantial percentage of its components replaced with aftermarket modifications is given a salvage title. For some car enthusiasts out there, being able to buy a custom car for cheap may be a dream come true.
However, it is crucial to know about the risks as well. An extensively modified car is harder to insure, and if you find an insurance provider willing to take the risk, the rates they charge will come at a premium. Additionally, there issues with safety and overall stability are quite common in such cars. Furthermore, not all the parts installed could be completely compatible with the make of the vehicle, and this could result in more issues in the future.

7. The Car is a Classic

Even a fully restored classic car may have a problem with re-titlement. Most likely, the car parted ways with its original title years or even decades ago and may have had an extensive percentage of its components wholly replaced. This, of course, would have meant that obtaining a re-title would have been trickier, and the original owner deemed it not to be worth the trouble. Still, just because a restored classic is a salvage title, doesn’t mean that, with some effort, you cannot grant it a roadworthy title again.

Some Important Bits of Information

Every state in the US has different policies and regulations when it comes to salvage cars. Some even may bar you from legally driving a salvage vehicle or even purchase it before it is considered roadworthy by an authorized inspector.

When you are in the market for a fixer-upper, it is worth it to bring along a trustworthy mechanic with you. A salvage car could look virtually undamaged but in reality, be suffering from irreparable damage. Only a thorough inspection by a car expert can allow you to accurately assess the extent of damage a salvage titled car suffers from and whether it is a wise idea to buy it or not.

To make the process of re-titling and registration easier, make sure to obtain bills of sale for every major component you purchased while restoring the salvage car. Not only will it serve as proof of complete ownership for the vehicle when you go for its registration but also save you headaches when it comes to passing inspections for re-titling.

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