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What Is a Salvage Title?

When you go shopping for a used car you may come upon a mysterious phrase associated with some of the automobiles you consider. What does it mean when you are looking at a car that has a "salvage title?" Should you be concerned? The following article outlines the concept of salvage titling and how different states deal with this designation.

Caveat Emptor

The Latin phrase "caveat emptor" is fairly well known. "Buyer beware" is a great principle, though our laws also require disclosures to prevent unscrupulous sellers from hiding facts about their products that might be difficult to spot with a surface inspection. Salvage titles are one such disclosure.

Which motor vehicles are issued a salvage title depends on the laws of the state that issues the title. But, in most jurisdictions, a salvage title is issued when a vehicle was involved in an accident and has been deemed a total loss by an insurer who paid a claim for the value of the vehicle. Such a vehicle might be repaired and put back on the market. When that happens, a salvage title should be considered a warning.

Of course, salvage titled vehicles can be a great deal. Their status should result in the vehicle costing considerably less than a comparable one. While Kelley Blue Book does not set a value on salvaged vehicles, these vehicles tend to sell at less than half the cost of a comparable car. A mechanic might be able to get a great deal on a salvage titled car, but novices should take warning. Since the vehicle was considered effectively destroyed, there is a significant chance that -- however the car may look -- it may still have some critical defects.

In addition, there are a number of states that require the issuance of salvage titles to identify stolen vehicles. Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma, and Oregon all use salvage titles in this manner. If a car is stolen and later recovered, the title can be changed to a "rebuilt" title in these states.

What Is a 'Total Loss'?

States, and in some cases insurers, have different standards for determining when a vehicle has sustained enough damage to qualify as a "total loss." In most circumstances if the cost of repair would exceed the calculated value of the vehicle, then the insurer will consider it a total loss, pay the claim, and take possession of the car. When the car is repaired and placed back on the market it bears a salvage title.

Generally speaking, a vehicle that has suffered damage amounting to 75 percent of its value will typically be considered a total loss. It should be noted, however, that states often legislate the standards by which a total loss can be claimed and they can vary considerably between states.

Other Considerations

Apart from the obvious risks involved in purchasing a salvage title vehicle, there are additional complications. Salvage vehicles are difficult to resell. Dealerships frequently refuse to accept salvage titled cars, even as a trade-in, meaning that resale can be a hassle. The vehicle itself is incapable of retaining much value, which means that insurers may be unwilling to pay out very much if there is an accident that results in new damages.

Get a Legal Case Assessment

There are a number of legal issues that can arise around salvage title vehicles. Whether you were sold a salvage title vehicle through fraud, have an argument with an insurer about their coverage of a salvage title vehicle, or any number of other disputes arise involving salvage title, you'll benefit from the assistance of a competent lawyer. Contact a local attorney for a legal case assessment to learn how to ensure your experience with a salvage title vehicle doesn't end up a total loss.

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