What Constitutes a Salvage Title

• Each state makes its own regulations and determinations about what constitutes a salvage vehicle title. In some states, damage of 75 percent or greater of the retail value of a vehicle makes it a salvage title, while in others it is 75 percent of the vehicle's pre-accident value. In still others, the "total loss" declaration of the insurance company makes the vehicle a salvage title. Some states make reference to whether the vehicle could be rebuilt, meaning it could be repaired and made highway safe, or could not be rebuilt, meaning the vehicle can only be sold for salvage parts and must not be driven on the road again. To complicate matters, some states use other words to indicate what many people refer to as a salvage title. Buyers of such vehicles may encounter designations such as "junk," "unsafe," "restored," "reconditioned" and "non-repairable."
  
  In many instances, a salvage title car has a serious accident in its history. In some states, though, stolen vehicles and confiscated vehicles may be labeled as salvage.
  
  

What Constitutes Full Coverage

• The phrase "full coverage" is not an insurance term so much as a consumer term. Often, when vehicle owners refer to full coverage, they refer to insurance that complies with their state's vehicle insurance regulations plus comprehensive and collision insurance. Salvage vehicles are likely to have a lower value than non-salvage vehicles. Insurance companies may consider them to be less safe and to have diminished structural integrity or stability. An insurance company may decline to insure a salvage title vehicle or charge a surcharge, meaning a higher premium, for the state's mandatory liability coverage.
  
  Many insurance companies will either not provide collision and comprehensive insurance coverage for such vehicles, or will provide these for a salvage title vehicle with a severely restricted value limit.
  
  

Inspections Requirements

• Many state laws require that a vehicle with a salvage title undergo an inspection, either by the state's department of motor vehicles or its state police. Other states do not mandate an inspection, but insurance companies in those states may demand the vehicle be inspected by a service facility they authorize. The insurance company may demand to see either the state inspection report or the garage report before it will issue insurance. The insurer is vested in determining that the vehicle is safe to operate on roadways.
  
  

Considerations

• Purchasers of salvage title vehicles should consider several factors. The vehicle has to carry the salvage title designation once that designation has been made. No matter how much restorative work the purchaser of such a vehicle does, when he sells the vehicle to a buyer, the car still has a salvage title. If an insurance company will agree to provide full coverage for such a vehicle, in the event of a claim related to collision, comprehensive or physical damage to the vehicle, the payout is likely to be less than it would be for a non-salvage title vehicle.