How Does a Car Become Salvage?
Before you purchase a salvage title vehicle, you need to know what you are getting yourself into.
Salvage title vehicles always come with a lot of questions. Most vehicles won’t ever become a salvage vehicle from the time they come off of the production line until they hit the junkyard decades later. How a car goes from "normal" to salvage is definitely a process. If you have recently been involved in a major accident or are considering purchasing a salvage title vehicle, it would behoove you to know how exactly how a car becomes a salvage — and what you’re signing up for if you decide to purchase one.
Buyer beware! The most common ways a vehicle becomes salvage is by being involved in a major accident or a natural disaster. But in some states, a vehicle can also become a salvage title if it was stolen and never recovered by the police. Both of these reasons should raise red flags, and you should proceed with caution.
In most cases, you are much better off avoiding buying a salvage title — they’re just more trouble than they are worth.
A Major Accident
If a vehicle is involved in an accident and is declared a total loss by the insurance company, but the owner decides to keep it anyway, the vehicle will be declared a salvage vehicle. The accident doesn't even have to be all that major if the vehicle is older and not holding much value at the time of the accident. Sometimes seemingly minor damage can spell the end of a clunker, at least as far as insurance companies are concerned. If a car is totaled, that can be step one on the road to becoming a salvage vehicle. Often these vehicles are sent directly to the scrapyard, but occasionally, a salvage title can get added for those drivers who do not want to part with their beloved vehicle.
Sadly, even a shiny new vehicle can be turned into a salvage vehicle after a severe accident. Even if the insurance carrier does not want to mess with the repair, someone may be willing to take on the job. But once an insurance carrier says it is not worth repairing, it will be issued a salvage title, even if the repairs are undertaken. If you want to remove the salvage title by repairing the vehicle, it will have to undergo a rigorous inspection before you’ll ever be allowed to drive it on the public roads. It will then be declared a rebuilt salvage title.
Each state has its own criteria for what makes a vehicle a total loss, also known as a salvage if repairs are made. Most states consider a vehicle with repairs costing 75% of its total actual cash value a salvage — that is if repairs are made.
It’s also worth keeping in mind that just because a car looks like it’s good as new does not mean that everything is functioning properly on the inside in a way that makes it totally safe to drive. If it has a salvage title, that’s probably for a reason.
Flooding is the biggest culprit for turning a well-functioning vehicle into a salvage. Many times the damage is not visible at all to a buyer. The water dries up and leaves little evidence behind. However, the mechanics of a vehicle can be severely altered, leaving the vehicle often times useless. Dealerships in flood planes are at risk of losing their entire lot due to floods and hurricanes. Of course, many individuals have to deal with flooded vehicles, too. Insurance carriers will cover flood damage if comprehensive coverage is selected.
Additional Reasons for a Car to be Salvage
It is not only major accidents and natural disasters which can cause a vehicle to be savage. Look for these other common reasons:
- Kit Cars — it’s usually best to leave the DIY projects for less complicated tasks.
- Restored Antiques — Repairing old vehicles takes special skills. Do you really want to take your chances?
- Stolen Car Returned After a Total Loss Payout — it doesn’t mean that the car doesn’t run, but you don’t want to get caught up in any legal trouble, do you?
- Major Car Repair Using Aftermarket Parts — it might look fine, but that doesn’t mean all is well.
New Jersey Motor Vehicle Division. "Salvage/Rebuilt Vehicles." Accessed Aug. 31, 2020.
Michigan Legislature. "Michigan Vehicle Code (Excerpt) Act 300 of 1949 - Section 257.217c." Accessed Aug. 31, 2020.
Progressive. "What Is Comprehensive Insurance?" Accessed Aug. 31, 2020.