A car is considered salvaged when an insurance company declares it a total loss because the cost of repairs exceeds its actual cash value (ACV), often due to severe damage from accidents, floods, or other incidents. This designation results in a salvage title, which signals that the vehicle has been significantly compromised and may have underlying safety or reliability issues. While salvaged cars can be repaired and resold, they typically have reduced resale value, higher insurance premiums, and may not meet original safety standards.
The process begins when a car sustains damage, and the insurance adjuster assesses the repair costs against the ACV—the market value just before the loss. If repairs exceed a certain threshold, commonly 75-100% of the ACV depending on state laws, the insurer totals the car. Common causes include collision damage, flood immersion, fire, or theft recovery. After being totaled, the car receives a salvage title, alerting future buyers to its history.
Purchasing a salvaged car can be risky due to potential hidden damage, but it might appeal to budget-conscious buyers or DIY enthusiasts who can handle inspections and repairs. Always get a pre-purchase inspection by a certified mechanic and check the vehicle history report. Below is a table illustrating common reasons for salvage titles based on industry data:
| Reason for Salvage Title | Percentage of Cases | Average Repair Cost vs. ACV |
|---|
| Collision Damage | 45% | 85% |
| Flood Damage | 20% | 95% |
| Theft Recovery | 15% | 70% |
| Fire Damage | 10% | 90% |
| Hail or Natural Events | 5% | 80% |
| Vandalism | 5% | 75% |
Key considerations include title branding, which varies by state—some allow rebuilt titles after repairs pass inspection. However, insuring a salvaged car is challenging; many providers offer only liability coverage. From an authority standpoint, organizations like the National Insurance Crime Bureau (NICB) track salvage data to combat fraud. Ultimately, while salvaged cars can be cost-effective, they require due diligence to avoid safety hazards.
