||This article contains wording that promotes the subject in a subjective manner without imparting real information. (April 2015) (Learn how and when to remove this template message)|
In North America, a salvage title is a form of vehicle title branding, which notes that the vehicle has been 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 each state, province or territory. In a minority of states and Canadian provinces, regulations require a salvage title for stolen or vandalized vehicles which are not recovered by police within 21 days. In such cases insurance companies declare a vehicle total loss and pay off the previous owner; 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 70% of its market value 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. In Oregon, vehicles are determined to be Salvage title meet the 70% total loss value as state previously, as well as when a vehicle is abandoned and worth less than $500. 
Many people are confused about the actual repair cost that insurance companies use to deem the vehicle a salvage title. Skeptical shoppers automatically assume that 50-70% repair to value ratio of a vehicle would suggest that the vehicle is completely totaled and beyond reasonable repair. This is not aways true and the shoppers who understand this are the ones who can obtain very good bargains. Although it is true that salvage titles are typically issued to vehicles when the repair costs exceed 50-70% of the vehicle value, this percentage needs to be considered in detail before assumptions are made.
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 with a salvage title
In the US, motorcycles and cars which carry a salvage title may not be registered and driven on public roads in most 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 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. The 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 45-55% lower than the vehicle's estimated value. These cars cannot be registered or operated on public roads or highways.
If the vehicle is rebuilt to a road worthy condition and has passed State inspection the difference in price is 40-50% of fair KBB. These cars have "rebuild" or "rebuild salvage" annotation in the title and can be registered and operated just like a new car.
Cars that previously had "junk" title and were restored to road worthy condition get a new title and VIN after state inspection. The new VIN will not match any other VIN numbers on the vehicle doors or panels. Year of the vehicle is determined by title issue date. These are considered to be self assembled cars.
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 Reports 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; title report provider Carfax settled a class-action lawsuit regarding the comprehensiveness of its reports in 2007.
- Griffin, Keith. "Understand Used Car Salvage Titles: Salvage Titles Not Always a Bad Proposition If You Act Carefully". About.com: Used Cars. NY Times. Retrieved 9 September 2010.
- Thompson, Marsha (2006-03-09). "The Legal Business of 'Title Washing'". wblt.com. WBLT3. Retrieved 9 September 2010.
- Belli, Sr., Melvin M.; Wilkinson, Allen P. (2003). Everybody's Guide to the Law. HarperCollins Publishers Inc. p. 62. ISBN 0-06-055433-9. Retrieved 8 September 2010.
Serious damage may have been done to the car that has not, nor cannot, be properly repaired.
- Parks, Dennis (2001). How to Build a Hot Rod Model A Ford. MBI Publishing Company. p. 17. ISBN 0-7603-0879-9.
- Eversman, E.L. "The Purpose Behind Salvage Title Laws". AutoMuse. Vehicle Information Systems, Inc. Retrieved 3 September 2010.
- Jessica, P. "Laws behind Salvage Titled Cars in Oregon". PortlandMotorCars.com. Retrieved 4 March 2016.
- Ets-Hokin, Gabe. "Buying a Motorcycle for the Compulsive or Impulsive- Part II". Motorcycle.com. Verticalscope Inc. Retrieved 9 September 2010.
- Ets-Hokin, Gabe. "Buying a Motorcycle Part IV: Where It Comes From A Day at a Wholesale Dealer's Auction". Motorcycle.com. Verticalscope Inc. Retrieved 9 September 2010.
- Congressional Record: Proceedings and Debates of the 106th Congress, First Session. United States Printing Office. 1999. p. 4808. Retrieved 8 September 2010.
- Futty, John (2010-09-08). "Ex-clerk gets 4 years in vehicle-title fraud". The Columbus Dispatch. Retrieved 8 September 2010.
- Andrews, Thomas; Benzing, Cynthia. "The Determinants of Price in Internet Auctions of Used Cars". Atlanta Economic Journal 35 (1). doi:10.1007/s11293-006-9045-7. Retrieved 7 September 2010.
- Reed, Philip. "Vehicle History Report: Your Key to a Good Used Car". Edmunds.com. Edmunds Inc. Retrieved 8 September 2010.
- "Wawanesa Insurance Found Liable for Bad Faith". Body Shop Business. Babcox Publications. Retrieved 9 September 2010.
- The Editors at Edmunds.com (2003). Strategies for Smart Car Buyers. Edmunds Publications. p. 64.
- Greaney, T.J. (2010-09-01). "State joins car title database". Columbia Tribune. Retrieved 9 September 2010.
- Korte, Gregory (2010-08-28). "Feds Investigate 'Cash for Clunkers' Car Dealers: Government Auditors Find $94 Million in Rebates May Be Ineligible Due to Faulty Documents". USA Today. Retrieved 9 September 2010.
- "Don’t rely on used-car-history reports". ConsumerReports.org. 2009-06. Retrieved 2010-06-18. Check date values in:
- Jensen, Christopher (2007-05-06). "It’s the Truth, but Not the Whole Truth". New York Times. Retrieved 9 September 2010.