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Automotive Legal Information - January 28, 2004


The Purpose behind Title Salvage Laws
By E. L. Eversman, Esq.

For most people, the words "salvage title" conjure up an image of a decrepit, unreliable vehicle which should be avoided at all costs. While most people cannot say exactly when or how a vehicle must be salvaged, we do know that a salvage title connotes something negative, and an automobile with a salvage history is not the type of previously-owned vehicle the average person sets out to buy. But what are the salvage laws and why do we have them?

Different in every state

The purpose behind salvage laws is to put someone on notice that a vehicle has been severely damaged or declared a total loss at some point in its history. In the U.S., salvage laws are governed by state law, and there is no federal salvage law which applies uniformly to vehicles across the country. Therefore, whether a car is required to be titled as a salvage vehicle is entirely dependent upon each state's laws.

State salvage laws tend to be damage-driven. Therefore, if your car is involved in a collision, the cost to repair is typically compared to the overall value of the vehicle immediately before the accident. If the cost to repair meets a certain threshold, the car may be required to be "totaled" and sold for its salvage value. Other states require vehicles to be salvaged if they have had material damage to the frame, unibody, or suspension. If it is to be salvaged, then the certificate of title is submitted to the Department of Motor Vehicles, and a salvage title is issued for the car, effectively "branding" the title.

However, there is no uniformity among the states and each state has its own standards for determining when a vehicle must be salvaged. Iowa sets its damage threshold at 50% of the value of the vehicle. Oklahoma's threshold is 60%. Kentucky, Louisiana, Nebraska and South Carolina's are set at 75%. Vermont mandates issuance of a salvage certificate if the damage requires replacement of 5 or more specified component parts. Hawaii issues a salvage title when there is material damage to the structure or suspension and the vehicle is declared a total loss. Some states, like Massachusetts, Nevada, and New Jersey, are referred to as "total loss states" because they have no threshold. Instead, these states typically defer to the insurer, mandating that a vehicle be issued a salvage title if the insurer feels that it is not economically feasible to repair.

Michigan adds to the confusion by requiring the issuance of a salvage title when a vehicle sustains damage between 75% and 90% of its pre-accident retail value. Unlike the majority of other states, vehicles issued a Michigan salvage title are not deemed to be total losses. Only when a car or truck sustains damage of 91% or more of its pre-accident value is it considered a total loss, and Michigan then requires a "scrap" title to be issued.

Total Loss does not necessarily equal Salvage Title

You might think that any time you hear the words "total loss" in reference to a vehicle that the car will be issued a salvage title. Think again. Many states' salvage requirements are damage related. Therefore, if your car is involved in an accident or a tree falls on it, it may be a total loss requiring the issuance of a salvage certificate. However, an insurer may also pay a total loss claim on a stolen vehicle. In states like Ohio, although the vehicle now has a total loss claim history, there is no requirement that it be issued a salvage title. Other states, like Illinois, issue a salvage title for total losses arising from theft but allow an insurer to exchange the salvage title for a regular title by demonstrating that the vehicle was recovered without structural damage. Still others salvage brand the title of any total loss stolen vehicle - even if it is later recovered with no damage at all.


Because there is no uniformity in the salvage and title branding laws, a vehicle can be repaired and sold with an unbranded title in a total loss state and end up for sale in a state which would have required the vehicle to be issued a salvage title. If you were a South Carolina resident considering the purchase of a vehicle which had been involved in a collision in Nevada requiring a repair of 80% of the value of the vehicle, a search of the vehicle's title history will not put you on notice of the existence or extent of the repair. Additionally, because the disclosures that must be given to prospective buyers (typically mandated by salvage statutes and consumer protection laws) require the seller to have actual knowledge of the damage, there will be many circumstances in which the seller has no legal disclosure responsibility to you - even if you later discover the true extent and nature of the damage sustained.

Vehicle History

While obtaining a vehicle history on any prospective car you consider buying is a good idea, unless the company has access to the Insurance Services Office (ISO) database, it could be significantly incomplete. The ISO collects, saves, and makes available to its insurer members a database containing vehicle claims information. If an insurer has paid any claim on a vehicle, the information will most likely be there. Companies that are self-insured, however, like the large car rental companies, do not report their losses to the ISO, so no information regarding damage or claims experience will be found in ISO's database. This is one of the key reasons why even dealers are hesitant to purchase rental cars - you may never really know what the cars have experienced.

Rebuilt Salvage

Just because a car has been issued a salvage title, however, does not mean that it can never be driven again or that it is illegal to sell. Many states allow even excessively damaged vehicles to be rebuilt and, upon passing an inspection, to be returned to the road. While you might think the inspection is required to ensure that the vehicle meets safety standards and is roadworthy, that is not always the case. Many rebuild inspection requirements were enacted to discourage the theft of parts, and the inspection law's purpose may be solely to discover whether illegal parts have been used in the rebuild.

What is the bottom line?

If you are considering buying a vehicle which has been salvage branded, realize that the brand can mean vastly different things depending on the state in which it was salvaged. Looking into the salvage history may produce valuable information. The vehicle might have been a recovered stolen vehicle without any damage at all. Or, it might have been virtually demolished and rebuilt. If it is a rebuild, make certain you investigate your state's rebuild inspection requirements because passing the inspection is not always a guarantee that the vehicle is safe to drive.

E. L. Eversman

The information provided in this column is for information purposes only and should not be construed as legal advice. You should always consult an attorney licensed to practice in your Country, State, and/or Territory as laws vary from Country to Country, State to State, and Territory to Territory. The author is delighted to share information but cannot be responsible for damage or adversity encountered by reliance upon that information and urges you to consult with local counsel.

The above article is provided for the interest and entertainment of our visitors. The views expressed in this article are only those of the author, who is solely responsible for the content. AutoGuide.net does not endorse any of these views, and is not to be held responsible for any of the content provided in the above article.

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