Salvage title
Encyclopedia
In the United States, a salvage title is a form of vehicle title branding
, which notes that the vehicle
has been severely damaged and/or deemed a total loss
by an insurance company that paid a claim on it. The criteria for determining when a salvage title is issued differ considerably by state. In a minority of states, regulations require a salvage title for stolen vehicles; but, in others, it is issued only for losses due to damage. Under some circumstances, a salvage title denotation may be removed or replaced with a Rebuilt Salvage designation; and cars imported to, or exported from, the United States may be issued a clean title regardless of history.
Because a salvage title can be issued to a vehicle with easily repairable problems or no damage whatsoever, the low cost of the salvaged motorcycle or car is appealing to some hobbyists and investors. Experts recommend caution when purchasing a salvaged vehicle, because there may be hidden damage, which, if unrepairable, may render the vehicle a "pile of parts."
at the time of the accident or theft. Thresholds range between 50% and 95% of the vehicle's value, while "total loss states" leave the specifics to the insurer. In the state of Michigan, the issuance of a salvage title does not mean that the vehicle is also deemed a total loss. Michigan issues a salvage title when the damage equals 75-90% of the pre-damage value; if the loss is 91% or greater the vehicle is eligible only for a "scrap" title, which cannot be subsequently upgraded by any means.
Upon paying the claim, the insurer may offer to return the vehicle to the owner as an insurance buy-back, in which case the owner is responsible for having the repairs made and having the car inspected by a State-designated facility. Depending on the state, this inspection may remove the salvage brand from the vehicle's title. The exact percentage of value that triggers the decision to total the vehicle is guided by applicable laws and regulations. The damage estimate is calculated at retail repair rates, which may be more than the cost of wholesale repair. Vehicles that are not bought back are auctioned as salvage to an auto recycler or a rebuilder and given a salvage title.
Industry standards followed by the National Automobile Dealers Association
Appraisal Guides, Kelley Blue Book
Market Report Official Guide, and the International Society of Automotive Appraisers devalue a motor vehicle that has a salvage title. Kelley Blue Book automatically rates any salvage vehicle as "poor" and does not value it at all. The value of a vehicle with a salvaged title is usually 25%-50% lower than the vehicle's estimated value.
Title washing refers to transferring a vehicle's registration for the express purpose of removing a title brand. The practice is legal, and practiced by the insurance companies themselves, Title brands such as "salvage," "junk," and "rebuilt" are not standardized, and a vehicle which has such a designation may receive a clean title when registered in a different jurisdiction. Further, vehicles imported to or exported from the United States and Canada are issued a clean title, even if they have been involved in an accident. Other states have relatively lax inspection criteria to remove the salvage brand.
noted that vehicle history checks would at times produce "clean" results despite the vehicles' being offered for sale as damaged on salvage-vehicle resale websites like eRepairables.com; title report provider Carfax
settled a class-action lawsuit regarding the comprehensiveness of its reports in 2007.
Vehicle title branding
Vehicle title branding is the use of a permanent designation on a vehicle's title, registration or permit documents to indicate that a vehicle has been written off due to collision, fire or flood damage or has been sold for scrap....
, which notes that the vehicle
Vehicle
A vehicle is a device that is designed or used to transport people or cargo. Most often vehicles are manufactured, such as bicycles, cars, motorcycles, trains, ships, boats, and aircraft....
has been severely damaged and/or deemed a total loss
Total Loss
Total loss is a 2000 Dutch drama film directed by Dana Nechushtan.-Cast:*Hans Bakker ... Bodyguard*Luc Boyer ... Father Hekking*Tijn Docter ... Co-assistant*Danny de Kok ... Fietser*Ricky Koole ... Muis*Mike Libanon ... Armin...
by an insurance company that paid a claim on it. The criteria for determining when a salvage title is issued differ considerably by state. In a minority of states, regulations require a salvage title for stolen vehicles; but, in others, it is issued only for losses due to damage. Under some circumstances, a salvage title denotation may be removed or replaced with a Rebuilt Salvage designation; and cars imported to, or exported from, the United States may be issued a clean title regardless of history.
Because a salvage title can be issued to a vehicle with easily repairable problems or no damage whatsoever, the low cost of the salvaged motorcycle or car is appealing to some hobbyists and investors. Experts recommend caution when purchasing a salvaged vehicle, because there may be hidden damage, which, if unrepairable, may render the vehicle a "pile of parts."
Determination of salvage status
In general, a vehicle is deemed "salvage" when the insurer determines that the repair or replacement cost is in excess of approximately 75% of its market valueMarket value
Market value is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some...
at the time of the accident or theft. Thresholds range between 50% and 95% of the vehicle's value, while "total loss states" leave the specifics to the insurer. In the state of Michigan, the issuance of a salvage title does not mean that the vehicle is also deemed a total loss. Michigan issues a salvage title when the damage equals 75-90% of the pre-damage value; if the loss is 91% or greater the vehicle is eligible only for a "scrap" title, which cannot be subsequently upgraded by any means.
Upon paying the claim, the insurer may offer to return the vehicle to the owner as an insurance buy-back, in which case the owner is responsible for having the repairs made and having the car inspected by a State-designated facility. Depending on the state, this inspection may remove the salvage brand from the vehicle's title. The exact percentage of value that triggers the decision to total the vehicle is guided by applicable laws and regulations. The damage estimate is calculated at retail repair rates, which may be more than the cost of wholesale repair. Vehicles that are not bought back are auctioned as salvage to an auto recycler or a rebuilder and given a salvage title.
Resale value of vehicles with a salvage title
Vehicles which carry a salvage title may not be driven on public roads in some states, which impacts resale value. Rebranding of the title is not permitted without having an inspection to verify that they meet all safety standards. The inspection procedure may be complex, and attempts to illegally circumvent the inspections are periodically reported.Industry standards followed by the National Automobile Dealers Association
National Automobile Dealers Association
The National Automobile Dealers Association, founded in 1917, represents nearly 17,000 new-car and truck dealers, both domestic and international, with about 37,500 separate franchises...
Appraisal Guides, Kelley Blue Book
Kelley Blue Book
Kelley Blue Book, headquartered in Irvine, California, is the United States' largest automotive vehicle valuation company. The company's website is a source for new and used vehicle pricing and information...
Market Report Official Guide, and the International Society of Automotive Appraisers devalue a motor vehicle that has a salvage title. Kelley Blue Book automatically rates any salvage vehicle as "poor" and does not value it at all. The value of a vehicle with a salvaged title is usually 25%-50% lower than the vehicle's estimated value.
Title washing refers to transferring a vehicle's registration for the express purpose of removing a title brand. The practice is legal, and practiced by the insurance companies themselves, Title brands such as "salvage," "junk," and "rebuilt" are not standardized, and a vehicle which has such a designation may receive a clean title when registered in a different jurisdiction. Further, vehicles imported to or exported from the United States and Canada are issued a clean title, even if they have been involved in an accident. Other states have relatively lax inspection criteria to remove the salvage brand.
Vehicle history reports
Vehicle history reports sold by specialty services are intended to disclose the title history of the vehicle, including title washing. Because many US states don't submit accident information to the central National Motor Vehicle Title Information System and junkyards don't always file required paperwork for destroyed vehicles, the accuracy of these reports is not high. Consumer ReportsConsumer Reports
Consumer Reports is an American magazine published monthly by Consumers Union since 1936. It publishes reviews and comparisons of consumer products and services based on reporting and results from its in-house testing laboratory. It also publishes cleaning and general buying guides...
noted that vehicle history checks would at times produce "clean" results despite the vehicles' being offered for sale as damaged on salvage-vehicle resale websites like eRepairables.com; title report provider Carfax
Carfax
Carfax may refer to: about car history.* Carfax , a website with vehicle history information* Carfax 250, a motor race* Carfax, Oxford, England* The centre of Horsham, West Sussex, England...
settled a class-action lawsuit regarding the comprehensiveness of its reports in 2007.