What Is a Salvage Title?

Buying a used car can be irritating and exhausting, but it’s something that happens almost 40 million times a year in the U.S. Sometimes, a deal sounds too good to be true. In certain instances, you may encounter a vehicle with a salvage title and not be exactly sure of what that means. A car with a salvage title has sustained significant damage, usually due to a motor vehicle accident.

While vehicles with a salvage title are typically much cheaper than other used cars, purchasing one means driving a vehicle that suffered a good deal of damage. This article will explore the risks and benefits associated with a salvage title vehicle and explain precisely what a salvage or rebuilt title means.

If you buy a car with a salvage title and the owner doesn’t disclose the vehicle’s history, you may have a legal claim. The best way to know for sure is to contact a local consumer protection attorney.

Salvage Titles: Buyer Beware

Most jurisdictions issue a salvage title when an insurance company declares a vehicle a total loss following a car accident. When the insurance carrier deems a car or SUV totaled, it pays the vehicle owner the fair market value of the vehicle.

With a total loss insurance claim, the vehicle owner can choose to apply the insurance proceeds to a new car or use them to fix their existing car. If they pay to repair the car, they can drive it themselves or attempt to sell it.

Some buyers look for salvage-titled vehicles because they’re often sold at a cheaper price than vehicles with a clean title. Most salvage vehicles sell for 20-50% less than a comparable car with a clean title. However, buying one of these vehicles comes with inherent risks.

How Do You Know a Vehicle Has a Salvage Title?

A salvage title indicates that an insurance company has deemed the vehicle a total loss. This means that the vehicle suffered enough damage to be declared not worth fixing by insurance company metrics. Factors include the severity of the damage, the age and overall condition of the vehicle, and the value of the car in undamaged condition.

In many cases, the previous owner has gotten an estimate from a body shop to determine the cost of repairs. If fixing the car will cost more than it’s worth, they may decide to sell it.

Whenever you buy a car from a private party, you take the risk that the vehicle will have problems. Don’t take the seller’s word. Not only should you ask questions about the car, but getting documentation showing the vehicle’s history is another necessity.

Before buying a car from a private seller, request to see the car’s title. If an insurance company has written the car off as a total loss, you should be able to tell by the title. It will say “Salvage” on the Certificate of Title if the vehicle has a salvage title.

Vehicle registrations are not an indicator of whether a car has a salvage title. The only way to know for sure is to check the title or use a service that can access the vehicle’s history.

Sellers Must Disclose That a Vehicle Has a Salvage Title

Consumer protection laws require that private sellers make specific disclosures about a car’s history when they advertise it for sale. This helps prevent sellers from fraudulently hiding facts about their vehicle that may not appear on a safety inspection.

Salvage titles disclose a vehicle’s history. Every state has laws dictating when a title must display that a car was a total loss. Many states require the issuance of salvage titles to identify stolen vehicles.

Some of the states with this requirement include:

• Arizona
• Florida
• Georgia
• Illinois
• Maryland
• Minnesota
• New Jersey
• New Mexico
• New York
• Oklahoma
• Oregon

Insurance companies apply for a salvage title from the DMV when they deem a vehicle non-repairable. Almost every state requires owners to secure a special title if they opt to fix a car that their insurance company has written off as a total loss.

If a vehicle owner chooses to do automotive repairs on a salvaged vehicle, they must obtain a new title called a rebuilt title from the state’s motor vehicle agency. A “rebuilt title” lets buyers know they are purchasing a damaged vehicle that’s been refurbished. Most states require a car with a salvage title that has been repaired to pass a state inspection before being registered. This may include providing a list of Vehicle Identification Numbers (VIN) for all parts used that weren’t purchased new, such as from a junkyard.

What To Do if the Insurance Company Issues a Salvage Brand?

If the insurance company declares your car a total loss, you must get a branded title designating it as such from your state’s Department of Motor Vehicles (DMV). The DMV issues the salvage certificate to your insurance company.

Once this happens, the insurance company will give the vehicle owner the option to take their vehicle back with a salvaged title or accept payment for the fair market value of their car or truck. If the owner wants the money, the insurance company can auction off the vehicle and sell it with a salvage title brand. Many of these vehicles are bought by auto salvage yards, which strip the cars and sell the usable parts.

If the insurance company sells the vehicle at auction to a private individual, it will give the new owner the salvage certificate as proof of ownership. Then the new owner must get the car inspected and review the vehicle history report.

You can run a vehicle history report and check the VIN by visiting AutoCheck, the National Insurance Crime Bureau (NICB), the National Motor Vehicle Title Information System, Kelley Blue Book, or Carfax. Some of these places charge a fee.

What To Consider Before Buying a Salvage Vehicle

Apart from the obvious risks involved in purchasing a salvage-titled vehicle, potential buyers should consider other complications. For example, is the vehicle safe? If a car isn’t roadworthy, you should not drive it. You can always take your car to the mechanic or scrap the vehicle for parts.

While vehicle safety is an overriding concern for people considering buying a salvage-titled car, there are other issues to consider. Let’s take a look at what you might run into.

Difficulty in Reselling Salvage Titled Cars

Salvage vehicles are difficult to resell, especially to out-of-state buyers. Dealerships often refuse to accept salvage-titled cars, even as a trade-in, making resale a hassle. Since the vehicle does not have much resale value, insurance companies may be unwilling to pay out much if an accident results in new damages.

Difficulty in Obtaining Insurance Coverage

If you have a car with a rebuilt title, you may have trouble finding a car insurance company that will provide full coverage for your formerly damaged vehicle. This means you may only be able to buy liability insurance for your car. While this will cover any personal injuries that result from an accident, it will not cover repairs to your car or SUV.

Can a Personal Injury Lawyer Help?

If someone sells you a car without disclosing that it has a salvage title, you may have a potential claim for any damages. The same is true if a dealership sells you a car without telling you that the insurance company declared the vehicle a total loss.

Several legal issues can arise with salvage-title vehicles. Whether someone fraudulently sold you a salvage title vehicle or your insurance company refuses to pay a claim on a totaled vehicle, you may need legal help.

Contacting a local consumer protection attorney after identifying the problem is a good way to get a legal expert on your side. If you are injured in an accident involving a car with a salvage title, contact a personal injury attorney.