What is a Salvage Title?

Many people do not fully understand what a salvage title is or how a car gains a salvage title status. This confusion has led to a great deal of misinformation being spread regarding salvage vehicles and auctions .

Knowing what causes a vehicle’s title to be designated “salvage” can be the best introduction to the concept. Salvage titles are typically created by insurance companies when one of their policyholders gets into an accident.

Usually, a person will get in a wreck or collision and the vehicle will sustain significant damage. The insurance company will then evaluate the extent of the damage in order to determine how much repairs will cost and how much their settlement will be.

If the insurance company’s estimate determines that the cost of repairs exceeds a great enough percentage of the car’s actual value, they will declare the vehicle a “total loss” or “totaled” as opposed to paying for it to be fixed. This percentage varies according to state and region, but the range typically falls between 70 and 80 percent.

Once a car is totaled, the insurance company will take possession of the vehicle and pay out the remainder of the owner’s policy. The car is now known as “salvage” and it will usually be sold to a salvage yard for repair, used as parts or be auctioned.

A salvage vehicle can be purchased and repaired to get it back to a normal running condition. Before the vehicle is allowed back on the road it must undergo an inspection through a state agency – usually a department of motor vehicles or some branch of local law enforcement. The vehicle will be inspected for proper braking, signaling and general road-readiness.

In most states, a salvage title history is permanent, even if the vehicle is completely repaired. Anyone selling the vehicle will have to disclose the salvage history status.

This contingency can make the resale value on a salvage/reconstructed vehicle difficult to determine. This means that most auto dealerships may be hesitant to accept the car as a trade-in. Owners of salvage/reconstructed vehicles typically end up selling the car to a private party, or they will drive the vehicle until it will not run anymore.

While a vehicle collision may be the most common way to damage a car to the point of being “totaled,” there are many other ways for a vehicle to be declared salvage.

• THEFT/STOLEN – Some states mandate that a vehicle be declared a total loss 21 days after being reported stolen. If the vehicle is recovered it will still be totaled regardless of its condition.
• FLOOD – Many states and jurisdictions have a special designation for flood-damaged vehicles, others simply list it as “salvage.” Be wary of purchasing any vehicle that has sustained significant water damage to its engine or electrical systems.
• HAIL – Hail damage may be enough to warrant a salvage title, even if the damage is mostly superficial.
• VANDALISM – Having a car’s paint be vandalized or having the vehicle be rolled over can require expensive enough repairs to have the insurance company declare it totaled.
• BIOHAZARD – Learn more about What does Biohazard mean on a car auctions?

All insurance companies base their estimates on getting the repairs done at a typical retail auto garage or body shop. These prices may not accurately reflect the wholesale cost of finding replacement parts and getting repairs, so some vehicles may be salvaged even if the damage is not truly expensive to fix.

If you ever have any questions or need any assistance, please do not hesitate to contact us at (215) 289-0300.

If you have any additional questions, please do not hesitate to contact us at (215) 289-0300.

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