Salvage title

A salvage title is an automobile title with a notation that the vehicle has been damaged in excess of approximately 70% of its pre-accident market value. The exact percentage depends on the insurance provider and any applicable laws and regulations. This notation gets applied to a title when an insurance company pays a total-loss claim on a vehicle, but then sells the vehicle at an auction center. If the vehicle is kept by its owner through a buy-back program, then the vehicle will retain a clean title. A properly restored vehicle is still safely drivable even if it is technically considered a total loss by an insurance company, particularly with older vehicles where even minor cosmetic damage would cost more to fix than the vehicle's pre-accident market value.

There is no specific formula in most states that specifies when a vehicle is deemed salvage; this is typically decided on a case by case basis. Once the auto is involved in an accident, the insurance company then offers the vehicle back to the owner as an insurance buyback or the car is sold to insurance auction centers, such as IAAI or Copart. With an insurance buyback the owner is responsible for getting the repairs made and having the car inspected by the highway patrol or a state regulated inspection facility. At this point, the car still has a clean title, no matter of the degree of the damage done, because it was never owned by the insurance company. If the auto is not a buyback, it is towed to a salvage auction where it will be sold to an auto recycler or a rebuilder, and given a salvage title. A rebuilder can sell the car as-is or fix the car and resell it as a rebuilt salvage titled car.

Having a "Salvage" or "Junk" title only applies to the United States and Canada. All vehicles imported or exported to other countries will automatically obtain a "Clean" title, even if they have been involved in an accident.

Some companies in the United States, such as Carfax, sell title reports to prospective car buyers which, among other things, reveal these title statuses. The information, however, might be far from being complete because of the inability of these companies to check accident records in 23 states and because not all accidents get reported to the authorities (particularly when there are no injuries). In 2007, Carfax settled a nationwide class-action lawsuit and the company will now include prominent warnings that its reports may not be complete.

Industry standards followed by and noted in print by the National Automobile Dealers Association (N.A.D.A.) Appraisal Guides, Kelley Blue Book Market Report Official Guide, the International Society of Automotive Appraisers (I.S.A.A.) and additional automotive business entities within the United States of America, all devalue a motor vehicle that is in possession of a “Salvage Title”, by 20% - 50% of the normal, fair market retail value of the vehicle without a “Salvage Title”. The percentage variance increases with the younger age of the vehicle at issue and the retail value of that vehicle. Any vehicle that is more than 10 years old carries the 20% minimum devaluation to the fair market value of the vehicle. Once a vehicle is branded with a “salvage or junk” title of ownership, this type of tarnished history stays with the unit, even if the branded title is "washed clean" in another state to be free of the designation “salvage or junk”.

When car shopping, it is important to always inspect a car thoroughly regardless of its title, some vehicles could have been in accidents never reported or involved in a buy back program. But keep in mind that if you buy a salvage title car, the chances of selling it to someone else and recouping your money are very slim. You might save $3,000, $4,000, $5,000. But you will lose that right off the top when you go to sell it. If you buy a salvage title car, you might want to count on keeping it until the wheels fall off. You may also want to check with your Auto Insurance Company to see if they will insure a "Salvage Titled" car and if so, at what additional cost.

Can you buy full coverage auto insurance for salvage vehicles?

Vehicles can get a "salvage" title when they have been salvaged or repaired when damages incurred are close to the total replacement value of the vehicle. These vehicles generally have a lower value due to factors such as safety, reduction of structural stability, major damage repair etc. By laws, a salvage vehicle will hold that title and will be indicated on the registration or title.

Auto insurance companies may look at salvage vehicles as unsafe, high risk or even unacceptable vehicles. That is why some insurers can reject or charge additional premium (surcharge rates) for salvage vehicles even when purchasing liability coverage only. Although some carriers may accept salvage vehicles for full coverage, one must be aware that in case of a total loss, one may not receive the full value from the insurance company.

Most carriers will not insure salvage vehicles for full coverage or comprehensive and collision coverage; however, if one does come across one that will, it is important to find out what their rules are on vehicle value assessment and how much you may receive in case of a total loss such as theft. It is common that an insurer will pay out 50% of what the vehicle would be worth with a clean title (not salvaged). Some vehicles can get listed as salvage even for damages from water, fire, theft, accidents or any damages resulting in a high cost vs. value ratio.

If needing full coverage for a salvage vehicle, one can shop for auto insurance quotes from a variety of companies in order to find out which insurer can offer the coverage for the specific vehicle at an affordable rate. OnlineAutoInsurance.com allows consumers to complete one simple form and instantly obtain the rates of multiple insurers.

How to Calculate Salvage Value of an Automobile?

Automobile salvage value is not an exact science. Insurance companies use a variety of factors in determining the auto salvage value, including a car's make/model, pre-accident condition and extent of damage. Having an idea of the salvage car value after you've been in an accident, however, can help determine your next step. That next step may include donating the car to charity, repairing the car or parting-out an automobile.

Instructions:

Research the blue book value for the car's make and model. The blue book value is its retail value through a dealer and assumes the car's in excellent condition.
Step2Look up the automobile's wholesale price through the automobile blue book or NADA guide value websites. The wholesale price is also known as its trade-in value.
Step3Compute the average price between the retail and the wholesale price to determine the car's current market value.
Step4Multiply the car's current market value by the percentage used by your insurance company. Insurance companies use a percentage of the automobile's market value, for example 75 percent of the market value equals the auto salvage value. The percentage varies from company to company. Contact your insurance company directly to determine the percentage it uses.

How can you find out the salvage value of a totalled car?

15-20% of the retail value of the vehicle at the time of loss is often a reasonable estimate.

You could try calling a salvage yard to get an idea. A vehicle totalled due to front end damage will have a lower salvage value than the same vehicle totalled due to a rear impact.

More input from other experts:
• I asked a Farm Bureau adjuster that same question and was told that it was 15% of the car's value. He then told me my salvage value was 2,500 on a vehicle he said was worth 7,500. (Comps and all listings on the internet had the vehicle at 10500-12500. He explained this difference as the difference in replacement costs and cash value.) He then said that the big discrepancy in salvage value was because the particular vehicle was in high demand so the salvage value was more. I could get no reference source or anything else from him. It appeared that they may just make it up.

• There really is no way to tell someone the salvage value of a car now, as compared to what the company will pay at the exact time of loss. Although, keep in mind also, that all insurance companies have different formulas and conditions for paying out on a total loss. For instance, I know of a few companies in Illinois that will formulate a value at time of loss based on the following factors: Cars Condition before the accident, current blue book value, current dealer re-sale prices, current salvage values, and current newspaper listing prices. Taking all these sources of info into consideration, it is difficult to say the least to compose a salvage value, until the actual time of loss, and after an adjuster examines the damaged vehicle.

• Generally, insurance adjusters are money-grubbing bottom feeders. If insurance companies didn't deny people the coverage they paid for, they wouldn't make as much money, so they do their best to screw you. If you are offered a check to cover a claim and you believe the offer is unfair, then do not accept it, and continue to push the insurance company for more money. Search the Internet for tips on doing this. You can often save literally thousands of dollars by not accepting unfair insurance offers. This may take substantial effort and time, but don't let yourself be pushed around.

• First off, Insurance Companies are not money grubbers. At least not all of them. There are some insurance companies out there that will screw you over but the right companies will be fair and reasonable to you. For instance, I know that The Hartford asks you what the condition of your car was prior to the accident, the adjuster who goes out to look at the vehicle looks at any prior damage on the vehicle and any mechanical malfunctions. They then go on the market (Auto Trader is used commonly) and search for vehicles in the same category condition and base your vehicles value on that value. They then retain the salvage. I know however that if you choose to keep your salvage title, they take the market value of the car and subtract with the salvage value and thats the money you get along with keeping your car. The main point of giving you market value is so that you can go out and buy the same exact car in the same condition as your vehicle was prior to the loss. In conclusion, there are some fair companies out there. Its the consumers sometimes that keep trying to take more because they see a no fault auto accident as a way to make money.

• I really take acception to people expressing their lack of faith in insurance companies. They for the most part are not the bad guys. They have a contract with their insured and most will provide a reasonable price to replace a totalled vehicle. Think about what most consumers expect with their vehicle. They expect to have more than they had and insurance is designed to put you back in the car of like kind and quality.

• If you think you are being lowballed by the insurance company than you may invoke the policy section where disagreements about settlement value can result in an independant appraisal/mediation. You will have to pay half of the fee for this, though.

Whoever thinks that insurance companies are reasoable and work to be fair is either deluded or sells insurance. Trying to deal with an insurance company by yourself is a losing game. You need an attorney in 90% of the cases where they are being unfair.

Most of the people who hate insurance companies look for betterment. They look to make money to screw the insurance company. In the area of totaling a vehicle, attorneys don't help at all, they don't even like getting into the property damage portion of the claim, only bodily injury so don't waste your money. Salvage value is about 20-25% of actual cash value. It depends where the damage is. Many vehicles sell high for salvage so don't let your small local junkyard offer you $100 for your car.