Glossary
Salvage title, defined
A brand a state motor vehicle agency places on a car's ownership record after an insurer has declared it a total loss. It tells every later buyer, lender and carrier that the vehicle was once written off, whether from collision, flood, hail, theft recovery or fire.
In practice
Insurers treat a branded car differently in three ways. Some will not write comprehensive or collision on it at all; those that do value it below a clean-title equivalent, so a total loss pays less; and some require an inspection with photographs before binding. Repair quality is unknown, which is the carrier's real concern. Once repaired and inspected, the brand usually changes to rebuilt, but the history stays on the record. Anyone buying a bargain car should run the vehicle history first and ask an agent whether physical damage coverage is even available before paying. Liability coverage is normally not affected.
A worked example
Suppose a driver buys a rebuilt car for $8,000 when a clean example is worth $14,000. A carrier agrees to write collision but values it at a set discount to clean book, say thirty percent below. Suppose it is totaled a year later: the settlement is based on roughly $9,800, not $14,000, and the loan may exceed that. Hypothetical figures.
Applies to: Auto Insurance