If your car was significantly damaged in a car accident, you may have come across the term “salvage title” while trying to figure out what to do next. But what is a salvage title? A salvage title is issued by a state’s department of motor vehicles when a car or truck has become so damaged – as the result of an accident, criminal activity, abandonment, or natural disaster – that the costs to make it road-safe are near to, or exceed, the value of the vehicle.
There are benefits and downsides to keeping a salvage title vehicle, just as there are pros and cons to pursuing legal action in the wake of an accident to recover your losses. The answer to the question “Is a salvage title bad?” isn’t always a clear “yes” or “no.” The answer depends on your specific situation, which is why it helps to have more information.
If you’re deciding whether to keep your vehicle, sell it, or junk it, the following FAQs will help you understand these processes, as well as your legal rights and options as an accident victim.
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What Does A Salvage Title Mean?
Vehicle titles formally establish ownership of a vehicle. Clean titles are lawfully assigned to vehicles that have not been subject to a manufacturer buyback and that have never been so damaged as to be classified as “totaled” resulting in a salvage title.
A salvage title alerts buyers to the potentially unsafe condition of the vehicle. This branding also alerts insurance providers and state motor vehicle agencies to the possibility that the vehicle may not be fit to insure or register.
Keep in mind that a salvage title is distinct from a junk title, which applies to vehicles that cannot be repaired to a road-safe condition. Vehicles with junk titles can only be sold for parts or scrap. If your car can’t be repaired, instead of Googling “What is a salvage title?” you may want to search for your nearest junkyard.
What Is A Salvage Title Threshold?
Each state has its own standards relating to salvage titles, so knowing your state’s salvage title laws is a good first step toward figuring out whether you want to keep, junk, or sell your damaged vehicle. If an insurance company has declared your vehicle a “total loss,” this means that your state’s threshold for a salvage title has likely been met. Usually, both vehicle owners and insurance companies are permitted to apply for salvage titles once this criterion is met.
A total loss occurs when the cost of repairs is near to, or more than, the vehicle’s value. The threshold varies by state, but typically a salvage title can be issued when the cost of repairing a vehicle’s damages exceeds 75 percent or more of its worth. But, the value of a salvage title vehicle’s damages may be as little as 50 percent. Here are examples of salvage title thresholds in various states:
Can A Salvage Title Be Cleared?
Once a title has been branded as salvage, it can never again be classified as clean. However, you may be able to obtain a rebuilt title if you can repair your car to the point where it will pass your state’s road-safe inspection.
What Is A Rebuilt Title?
If a salvage vehicle is repaired to the extent that it can again be driven safely, its status may be rebranded via a rebuilt title. Vehicles with rebuilt titles aren’t necessarily fully repaired as they can often retain cosmetic defects. However, rebuilt titles can be issued once a state’s inspection criteria have been met.
Why Apply For A Salvage Title?
Given that salvage title vehicles can be more difficult to insure or sell, you may be wondering why you would want to apply for a salvage title. The first reason is that you may be required to do so. In California, for example, you must apply for a salvage certificate within 10 days after an insurance company makes a total loss settlement.
But you’ll also need to update your title if you want to restore your vehicle as you can’t obtain a rebuilt title until your current title is branded as salvage. Selling your salvage vehicle will also require a salvage title. Remember that potential buyers have access to free Vehicle Identification Number (VIN) searches and if you haven’t disclosed that your vehicle is salvage, you could not only lose a sale, but you might face accusations of fraud.
Can You Drive A Car With A Salvage Title?
Depending on the extent of the damage and the value of the vehicle, it may be possible to drive a car with a salvage title. However, many states prohibit the operation of salvage title vehicles. That’s why it’s usually a good idea to avoid driving a salvage title vehicle until it has been repaired sufficiently enough to be rebranded as a rebuilt title vehicle.
Should You Keep A Car With A Salvage Title?
If a salvage title vehicle has been properly repaired, issued a rebuilt title, and inspected by a reputable mechanic, it may be worth keeping. If you’re a hobbyist and you can either effectively repair the vehicle or use its parts for your other cars or trucks, your vehicle may also be worth keeping.
Should You Sell A Salvage Title Vehicle?
Because they can’t generally be insured or lawfully operated, salvage title vehicles tend to be sold for cheap. If you choose to sell your salvage vehicle without repairing it, you won’t be able to sell it for much. But what is a salvage title vehicle actually worth?
If you repair your vehicle and hope to sell it with a rebuilt title, know that the value of your rebuilt title vehicle – even if it’s running beautifully – will be considerably less than it would be if your vehicle’s title was clean. The value of rebuilt title vehicles is generally 20 to 40 percent lower than the market value for the same make and model with a clean title.
What Is A Salvage Title? Next Steps After Your Car Accident
If your car or truck is now a salvage title vehicle as a result of a car accident, you’re facing financial losses that can mount over time, not to mention possible physical injuries. Find out what losses you may be able to recover by getting a free legal review of your claim today.
Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.