Car accidents in California are not uncommon. Most people will get into an accident more than one time throughout their lives. In those cases, people get into an accident, and then an insurance carrier will cover the expenses to fix their vehicle. However, what happens when a vehicle will cost more to repair than the vehicle is worth? In some cases, the vehicle may be issued a salvage title. It is important to understand what you can and cannot do with a salvage title in California.
Defining a salvage title
Some people are aware of salvage titles, but this is not something that comes up regularly in conversation. If you are shopping for a used car, you may have seen that a vehicle you are looking at has a “salvage title.” It is important to recognize what this means.
The California Department of Motor Vehicles will consider a vehicle “salvage” after it has been in a crash, destroyed, or damaged to the extent that the insurance carrier considers it not worth repairing. In most situations, this means that cost of repairing the vehicle exceeds the value of the vehicle. Many insurance carriers deem a vehicle not worth repairing if the cost of repairs exceeds 75% of the “actual cash value” of the vehicle. In this scenario, the vehicle is not repaired and the owner will be issued a payout of the value of the vehicle’s pre-accident value. Let us use the following example to help understand why a vehicle would be considered salvage:
- Suppose Blair has a 2009 Ford Explorer and she is involved in an accident. The vehicle needs $11,000 in repair, but the value of the vehicle is only $8,000. In this scenario, the insurance carrier is going to payout the pre-accident value of the vehicle and consider it a loss as opposed to paying the full $11,000 to repair it.
How do salvage vehicles end up for sale again?
After an insurance company pays the vehicle owner the pre-accident value of the vehicle, the insurance company becomes the owner of that vehicle. They will register the vehicle as salvage with the DMV and receive a “salvage certificate” to take it to the salvage yard.
In most situations, the vehicle will be auctioned off to a dealer, re-builder, scrapper, dismantler, or exporter. Usually, these people will buy the vehicle to be used for parts, though some may intend to resell them to the public. It is not illegal to sell a salvage car, but the seller will need to inform the buyer that the title is salvage.
It can be very difficult to get a salvage vehicle registered with the DMV in California. In order for the state to allow a salvage vehicle to become registered, the vehicle must pass a certain set of inspections and certifications with the California Highway Patrol and a brake and light inspection with a licensed automobile professional. If a vehicle does not pass inspection, it could not be registered until repairs are made.
If a vehicle has been “rebuilt” and has a new registration, it may be harder to find an insurance carrier that will provide coverage for the vehicle. However, there are some insurers in California that do provide coverage for rebuilt salvage vehicles, though this will likely only be liability coverage and not full comprehensive coverage on the vehicle.