What’s a Salvage Title Car and 3 Reasons to Avoid Them

What is a salvage title?

Most often, a salvage title means a car has extensive damage that’s near or in excess of the value of the car. While the exact rules vary by state, they can have similarities.

For example, Minnesota salvage title laws say a salvage title is required for each of these situations.

  • An insurance company acquires the damaged vehicle after paying a total loss claim
  • A vehicle’s damage is more than 80% of its value and the vehicle’s owner is self-insured
  • A vehicle has an out-of-state salvage title

New York’s laws are similar, though there are some differences, including that the repair costs must total 75% or more of the car’s pre-damage market value.

In many states, a salvage title car can’t be driven on public roads.

Check with your state’s transportation agency or department of motor vehicles to find out what’s considered a salvage vehicle where you live.

It’s important to note that it’s not just accidents that can cause a car to be totaled. Flooding, fire, vandalism, theft and other major events like hail storms can also result in damage that warrants a salvage title, depending on the state.

Telling the Difference Between Clean or Salvage Title

There are a few ways to tell if the title of a car is clean or a salvage title. Here are three ways to tell if a title is clean or salvage. 

1. Look at the title for a stamp or watermark

Each state has different methods for indicating if a title is a salvage. You can look at the actual title and find either stamp that says “salvaged” or some sort of watermark that indicates it is a salvaged vehicle.

2. Check with the DMV or Tag Agency

The Department of Motor Vehicles or your town’s tag agency should be able to give you the information about the car you are looking at buying. All you need is the vehicle identification number, and they can pull up the history and records of that car. 

3. Use an online VIN Checker

There are many different resources online that can run a vehicle’s VIN and give you information about it. You can use these websites to find out things such as a history of accidents, current recalls, or if the title is salvaged or rebuilt. 

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6: The Owner Hasnt Had the Car Re-titled Yet

The designation of a salvage title for a vehicle doesn’t necessarily mean it’s headed for the scrap heap. Some states label salvage-titled vehicles as "repairable" or "irreparable," designating whether they can be rebuilt and re-titled, or they must be used for parts or recycled [source: QuinStreet Insurance Agency Inc.].

When a vehicle with a salvage title can be safely repaired, the licensing state will often issue a rebuilt title after the vehicle passes a safety inspection. These inspections vary widely from state to state, so it’s smart to check your state’s regulations before considering a salvage-to-rebuilt vehicle project.

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If you’re considering buying a vehicle that has a salvage title but appears to have been restored, find out why the owner didn’t have it re-titled. The answer could be as simple as a misunderstanding of title laws, or it could indicate the owner is trying to hide something about the car.

8: The Car Was in a Natural Disaster

Widespread natural disasters like earthquakes and hurricanes wreak havoc on vehicles. A car tossed on its roof by a massive temblor is going to sustain a fair bit of damage, as is a car that spends a day half-submerged in a hurricane. The demand on insurers to evaluate these vehicles can overwhelm the insurance system; even though the vehicles are often supposed to be pulled from circulation due to the damage, they can slip through the organizational cracks — whether through fraud or a simple honest mistake — and end up on used car lots.

The salvage title is a safety device in these situations: A person trying to sell a flood-damaged car with a salvage title may face tough questions if he or she tries to sell the car and claim its title came from a theft or other non-damage reason. But water damage can be hard to detect in a vehicle that has been thoroughly cleaned, and it’s all too easy for an unscrupulous seller to profit by selling a flood-damaged car to an unsuspecting buyer.

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If a car appears to be clean, safe and undamaged, but has a salvage title and comes from a flood- or hurricane-prone region, be wary of flood damage. Checking the history of the vehicle using its vehicle identification number, or VIN, is a effective way to find out where it has been licensed and if it has been damaged [source: Lease Guide].

How Does a Salvage Title Work?

When a car has been declared a total loss, either its owner or the insurance company can apply for a salvage title. Which party does so depends on who plans to retain possession of the vehicle.

If the owner chooses to keep a totaled vehicle or didn't have insurance coverage, they would be responsible for applying for a salvage title. If the insurance company repossesses a damaged vehicle after declaring it a loss, the insurer would apply for the salvage title.

Salvage titles can be obtained through the state department of motor vehicles. Though the process varies from state to state, it typically involves filling out an application, paying any required fees, and submitting the car to a salvage vehicle examination. The examination will assess the extent of the damages and the vehicle's overall condition.

A salvage inspection is not the same as a regular safety inspection or emissions inspection. It may vary by state, but in the state of Massachusetts, the examiner will do all of the following during an inspection::

  • Verify that the vehicle identification number (VIN) of the car matches the number shown on the application.
  • Check the odometer to make sure the mileage matches the application.
  • Compare the vehicle's condition to what's stated on the application.
  • Verify that the vehicle's parts haven't been removed, defaced, destroyed, or otherwise tampered with prior to the inspection, beyond the damage that has been reported.

If you go in for a salvage inspection, you may need to bring certain documents with you, including your application for the salvage title, a receipt showing that you paid the appropriate fee, a copy of your insurance company's damage or appraisal report, and a bill of sale for any repair costs or parts you purchased.

What are some advantages and disadvantages of having a salvage or rebuilt title?

Purchasing a previously damaged vehicle can be a risky move, but if you know what you’re doing, it could also be a smart move. One advantage of vehicles with a salvage or rebuilt title is that they generally cost much less than those with clean titles. In fact, salvage or rebuilt vehicles generally cost 20%-40% less than the same type of vehicle with a clean title, according to Kelley Blue Book.

On the other hand, purchasing a car with a rebuilt title can lead to more costs in the long-term if the repairs previously made were not up to par. When you purchase a salvage rebuilt vehicle, you are accepting that extensive damage has occurred to the vehicle. In some cases, there may still be undisclosed or unseen damages that could arise at a later date.

Likewise, even if the vehicle has been fully repaired, you may have trouble finding insurance coverage for the car. In many cases, those carriers who insure vehicles with a rebuilt title may charge the same premium as a similar vehicle with a clean title, even if your vehicle is worth much less.

The Signs of a Salvage Title Car

While you should always check the vehicle history report and have a trusted auto mechanic review the vehicles for problems, there are obvious signs that a vehicle is basically a rebuilt lemon and should be avoided.

Look for these tell-tale signs:

  • Most states require direct identification of the vehicle that’s been in a salvage situation on the title. Ask to see the title before anything else.
  • The vehicle paint easily chips off or doesn’t match the rest of the vehicle (This could indicate an intent to hide damage by the seller.)
  • A Certified Automotive Parts Association (CAPA) sticker on any vehicle part or component could signal collision repair.
  • Any wheel misalignment could point to frame collision damage.
  • A car door that doesn’t open or close properly could also mean the vehicle underwent major repairs (and was improperly repaired)
  • If the vehicle’s hood is misaligned and doesn’t close perfectly, that could be an indicator of a major collision impacting the front and sides of the vehicle.
  • If your electrical components don’t work properly—especially if they flick on-and-off intermittently—that could be a sign of significant flood damage to the vehicle.

Lemon Laws

Under most state lemon laws, a dealer must, at no cost to the buyer, repair any problems with the vehicle over a specified period of time or provide for full reimbursement for the costs of such repairs.

In the event an auto dealer is unable to repair the vehicle after a reasonable amount of time, depending on a state’s lemon law statutes, the buyer is entitled to a complete refund of the damaged vehicle’s purchase price.

Your state department of motor vehicles has detailed information on state lemon laws, including an explanation on salvage titles, and how to properly identify them. Here’s a state-by-state list of U.S. motor vehicle departments.

How does a rebuilt title affect the value of a car?

A vehicle having a rebuilt title will likely have a lower market value because it underwent significant damage. Compared to similar models with clean titles, a car with a rebuilt title could have 20% to 40% less value, amounting to potentially thousands of dollars.

Step 3: Schedule an inspection with a California-approved inspector

As part of getting a new title, you’ll need to schedule an inspection with a California-approved inspector. Have your vehicle identification number ready for an inspection from the DMV. 

In some cases, the DMV may require you to get an inspection from the California Highway Patrol (CHP). If your vehicle passes the inspection, they’ll give you a Reg 31 form, the DMV’s form for the Verification of Vehicle.

Approved CHP inspection sites

If you’re referred to the California Highway Patrol, you’ll want to have any proof of ownership documents and repair bills. The CHP also often checks vehicles that may have a high likelihood of being stolen. After passing the CHP inspection, you’ll receive a CHP 97C certificate, which is the Certificate of Inspection. 

Don’t forget: You’ll also need brake, light, and smog inspections for your vehicle and the respective certificates for each inspection to prove your vehicle has passed. 

If you’re referred to the CHP, here are the currently approved CHP inspection sites as listed on the CHP website:

Northern Division2485 Sonoma StreetRedding, CA 96001-3026Phone: (530) 242-4360

​Inland Division

847 E. Brier DriveSan Bernardino, CA 92408-2820Phone: (909) 806-2437

Valley Division

11336 Trade Center DriveRancho Cordova, CA 95742-6219Phone: (916) 464-1480

Border Division

9330 Farnham StSan Diego, CA 92123-1216Phone: (858) 492-1745

Golden Gate Division

1551 Benicia RoadVallejo, CA 94591-7568Phone: (510) 622-4611

Westminster Area

13200 Golden West StreetWestminster, CA 92683-2299Phone: (714) 892-4426

Central Division

5179 North Gates AvenueFresno, CA 93722-6414Phone: (559) 488-4053

Otay Mesa Inspection Facility

2335 Enrico FermiSan Diego, CA 92154Phone: (858) 492-1745

Southern Division                                                                             411 N Central Ave. #410Glendale, CA 91203Phone: (323) 644-9593

​Coastal Division

4115 Broad StreetSan Luis Obispo, CA 93401-7963Phone: (805) 549-3006

Can a salvage title be changed to clean?

You can’t remove the salvage title from a vehicle and give it a clean title—but you can rebrand the car as a rebuilt title (also known as a reconditioned title or assembled title). Before diving into the process of changing a salvage title, it’s important to note that it is illegal to try to hide the history of a car. In fact, it’s called title laundering and it’s a crime. Before you try to change a salvage vehicle title, get acquainted with your state’s registration and titling laws.To change a salvage title to a rebuilt title, you will need to repair the vehicle and submit it for inspection to the Department of Motor Vehicles (DMV) in your state. If the car passes the inspection, the DMV can rebrand the salvage title to a rebuilt title.In a sense, the title has been "cleaned"—but potential buyers and insurers will understand that the car had a salvage title in the past. If you choose to sell or want to insure the vehicle, this can certainly complicate things.

Key Takeaway Salvage titles can be rebranded as rebuilt titles, but insurers and potential buyers are entitled to the history of the car.

MORE: Should I buy a car with a salvage title?

Insuring a salvage-title car

While it’s not impossible to insure a salvage-title vehicle, it may be more difficult to do so — especially if you require full coverage with collision and comprehensive.

Most insurance companies will write a liability policy for a salvage-title car but are often hesitant to include collision and comprehensive. For one, assigning an accurate value to a salvage-title car is challenging. According to Kelley Blue Book (KBB), a salvage-title car is typically worth 20% to 40% less than one with a clean title. If you make a claim on a salvage car, you should be prepared for a much lower “total loss” payout than you might expect from a car that’s “clean.”

The second reason is safety. Salvage cars often have lurking problems that may or may not be addressed in the process of restoring them to health. Not all rebuilders are honest, and cutting corners to boost profitability is fairly common. Either or both of these realities can result in a vehicle with structural and alignment issues that make it dangerous to drive.

If you are shopping for a salvage title policy, here are a few tips for finding the best coverage:

Shop around. Roughly 20% to 30% of insurers will not insure a salvage-title vehicle, so you will need to shop around. Contact your current insurer to see if they offer coverage. If they don’t, start shopping. Be prepared for an inspection. Some insurers will require an inspection and appraisal before they will insure a salvage-title car. If you disagree with the appraisal amount, then you should try to negotiate a higher amount or continue shopping for a new policy. Even if an inspection isn’t required to insure the vehicle, you may want to get one anyway. Before buying, have a trusted mechanic thoroughly inspect the vehicle. Get a repair estimate. If possible, get the original repair estimate from the rebuilder or the insurance company that totaled the car. This can give your insurance company peace of mind that all damage has been repaired. Prepare to pay more. Pricing will also vary by insurer, but you shouldn’t expect a break on your premiums for a salvage car because you got a deal on the purchase price. If anything, the opposite will be true: Some insurance companies will add a surcharge of up to 20% to the policy when insuring a salvage-title vehicle. Consider less-than-full coverage. Consider getting a liability-only policy, which financially protects you if you injure another person or their property. It will not cover the cost to repair your own vehicle. Liability only insurance is much easier (and less expensive) to get with a salvage-title car.

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