What Does A Vehicle Salvage Title Mean?

What Does A Vehicle Salvage Title Mean?

A Salvage Title on a vehicle typically means that at some point in the vehicle’s history the car has been claimed a total loss by an insurance company because of an accident or flood damage. It can even apply in some states if it’s a recovered stolen vehicle – so, all pretty much not good things. Also, government agencies routinely test new vehicles, and cars sold after the government gets its use out of them are given a Salvage Title as well.

When a total loss happens because of damage, the car can sometimes be bought back by the owner or sold to someone who will repair the vehicle and put it back on the road. When this happens it’s issued a Salvage Title. Laws and regulations regarding salvaged titles vary from state to state, so be sure to check with your state’s motor vehicle department for the most accurate information.

Salvaged cars typically go through an inspection by the state’s motor vehicle department before being issued a Salvage Title, but inspection procedures also vary by state and some may be a simple VIN code and emissions system check. Others may be a more thorough safety inspection.

A Salvage Title can significantly change the equation when you’re looking into buying a car. In many states, this type of title indicates that the vehicle has been damaged, recovered after being stolen, or written off as a total loss by an insurer. In some states, a Salvage Title may prevent you from legally driving the car on the road and might even prevent you from purchasing the car in the first place. On the other hand, some of the reasons a car may receive a Salvage Title have little to do with its history, functionality or safety.

While every state has different regulations, there are a number of common reasons for a car to receive a Salvage Title. Insurance companies will consider a vehicle totaled if the cost to repair it after an accident exceeds a certain percentage of its value. Many states specify standards for this valuation, though for many insurance companies, the standard limit is 75 percent of the vehicle’s total value. In this situation, the insurer sees replacing the vehicle as a more financially wise option than repairing it. (Source: Carfax.)

A Salvage Title should, first and foremost, be a warning flag that a car may have been damaged in an accident. The plastic body panels and high-tech components that go into today’s cars can mean that even a small accident might lead to very expensive repairs. An accident could also cause subtle but irreparable damage to the car’s frame or other critical parts.

Insurance companies may be more likely to repair a car if they choose to use alternative parts components from manufacturers other than the one that built the car. While the quality of these parts is supposed to equal that of the original vehicle, it’s worth investigating how a car was repaired if it was ever in an accident. If the car was totaled and you’re in the market for a fixer-upper, you owe it to your safety and that of your future passengers to thoroughly understand the extent of the damage, and determine if it’s within your ability to repair it. Improperly selling a salvage vehicle can be a serious felony offense. Sellers must disclose in writing that the vehicle is a salvage vehicle.

In the state where I reside, Nevada, let me explain the rules pertaining to Salvage Titles.

“Salvage vehicle” is a motor vehicle that at one time has been declared a total loss vehicle, flood-damaged vehicle, non-repairable vehicle, or had “salvage” or a similar word or designation placed on any title issued for the vehicle.

Total Loss – A vehicle that has been damaged to the extent that the estimated cost of repair, not including the cost associated with painting any part of the vehicle, would exceed 65 percent of the fair market value of the vehicle immediately before the damage was incurred. Vehicles with less than 65 percent damage are not considered salvage vehicles.

Flood Damaged – A vehicle that has been submerged in water to a point that the level of the water is higher than the door sill of the vehicle and water has entered the passenger, trunk or engine compartment of the vehicle and has come into contact with the electrical system of the vehicle; or a vehicle that is part of a total loss settlement resulting from water damage.

Non-Repairable – A vehicle, other than an abandoned vehicle, that has value only as a source of parts and scrap metal, or has been designated by its owner for dismantling, or has been stripped of all body panels, doors, lights, etc., or has been burned or destroyed beyond a restorable condition.

Salvage vehicles in Nevada are issued an orange-colored Salvage Title. A salvage vehicle may not be registered or operated on any public street until it has been rebuilt and inspected. Once a salvage vehicle has been repaired, it becomes a rebuilt vehicle and may be registered and/or sold if the proper procedures below have been followed. Non-Repairable vehicles are issued a Certificate and may not be restored to operating condition.

Older Vehicles

Vehicles 10 model years old or older are not considered salvage vehicles if the only repairs needed are a limited number of items. Specifically, the hood, the trunk lid, and/or up to two of the following: doors, grill assembly, bumper assembly, headlight assembly and taillight assembly.

If the vehicle requires more repairs than this, the 65 percent damage rule applies (other states are higher). For example, the 65 percent rule would apply if the grill, front bumper and one headlight assembly were replaced. If only the hood, the grill and the bumper were replaced, the 65 percent rule would not apply and the vehicle would not be considered a salvage vehicle. The 65 percent rule does not include any cost of paint or labor to paint the vehicle.

Rebuilt Vehicles (Non-Salvage)

Vehicles which have had certain repairs must be titled as Rebuilt even if they do not meet the definition of a salvage vehicle. See Non-Salvage Rebuilt Vehicles. (Source: NRS (Nevada Revised Statue, state of Nevada.)

If you’re interested in a car that has a Salvage Title, and the owner claims it was stolen and recovered, find out why the car hasn’t been re-titled yet. The owner should have done this before offering the car for sale as a matter of good business; failure to do so may be a sign that there’s something else wrong with the car.

So if you are purchasing the vehicle of your dreams, make sure to check the vehicle’s history to ensure you are getting the best bang for your buck.