Insurance Car Insurance Car Insurance Basics How Does a Car Become Salvage? By Emily Delbridge Emily Delbridge Twitter Emily Delbridge is an authority on car insurance and loans who contributed to The Balance for nine years. Delbridge is a licensed Personal Lines Insurance Agent who has been in the insurance business since 2005. Since joining the industry, she has significantly contributed to the book of business for independent agency, Great Michigan Insurance. learn about our editorial policies Updated on December 27, 2021 Reviewed by Samantha Silberstein Reviewed by Samantha Silberstein Twitter Samantha Silberstein is a Certified Financial Planner, FINRA Series 7 and 63 licensed holder, State of California Life, Accident, and Health Insurance Licensed Agent, and CFA. She spends her days working with hundreds of employees from non-profit and higher education organizations on their personal financial plans. learn about our financial review board Share Tweet Pin Email In This Article View All In This Article Major Accidents Natural Disaster Additional Reasons for a Car to Be Salvage Frequently Asked Questions (FAQs) Photo: Westend61 / Getty Images Before you purchase a salvage title vehicle, you should know what you're getting yourself into. Salvage title vehicles have been damaged beyond their market value and been declared a loss by an insurance company. The most common way a vehicle becomes salvage is by being involved in a major accident or natural disaster. But in some states, a car can also get a salvage title if it was stolen and never recovered by the police. All of these reasons should raise red flags, and you should proceed with caution. Here are some common reasons a vehicle becomes salvage-titled. Key Takeaways Accidents and natural disasters are only a few of the reasons a vehicle becomes salvage-titled.Salvage-titled vehicles can become more costly to drive than those that aren't.It can take a lot of work, time, and money to get a salvage vehicle back to a drivable state. Major Accidents If you're involved in an accident, and your car is declared a total loss by the insurance company, you can keep it and have it repaired—but your provider will declare it a salvage vehicle. The accident may not be significant, but the car could still be damaged beyond its value. This often happens with older vehicles that may not be worth much at the time of the accident. Even a new vehicle can be turned into a salvage vehicle after a severe accident. If the insurance carrier does not think repairing the car is worthwhile, someone else may be willing to take on the job. But once an insurance carrier says it's not worth repairing, it will be issued a salvage title even if you have the repairs done. If you want to remove the salvage title by repairing the vehicle, it will have to undergo a rigorous inspection before you're allowed to drive it on public roads. The inspection includes reviewing your receipts for all the parts you or your mechanic purchased to rebuild the vehicle. If it passes inspection, it will then be declared a rebuilt salvage title. Note In many cases, you are much better off avoiding buying or keeping a salvage title vehicle—they can be more trouble than they're worth. Each state has criteria for what makes a vehicle a total loss. Most states consider a car that is in need of repairs that would cost 75% or more of its total actual cash value to be a salvage. It’s also worth keeping in mind that just because a car looks like it’s good as new on the outside, that doesn't mean everything is functioning correctly on the inside. If it has a salvage title, it's probably for a reason. Natural Disaster Flooding is another reason a vehicle may get a salvage title. Many times, the damage is not visible at all to a buyer. The water dries up and leaves little evidence behind. However, the mechanical and electronic parts of a vehicle can be severely damaged, leaving the car unreliable. Dealerships in flood planes are at risk of losing their entire lot due to floods and hurricanes. Of course, many individuals have to deal with flooded vehicles, too. Insurance carriers will cover flood damage if comprehensive coverage is selected. Additional Reasons for a Car to Be Salvage It's not just major accidents and natural disasters that can cause a vehicle to be titled as salvage. Here are other common reasons: Kit cars: A salvage title on a kit car may mean that it never passed the inspection needed for it to be correctly registered or that it needs additional work.Restored antiques: If an antique has been properly restored, the seller should have a title. If it's a salvage title, you may need to take additional steps to repair it (and keep the receipts for any parts you use).Stolen car returned after a total loss payout: There may not be anything wrong with the vehicle, but if that's the case, the owner should have received a rebuilt title before selling it. In other words, do your due diligence before buying.Major car repair using aftermarket parts: If you've had a vehicle repaired with essential components that are aftermarket, such as an engine, you might run into some problems with inspectors and insurers. You might not be able to find a company to insure it, for example. As with other situations, inspect the vehicle (or have a trusted mechanic inspect it), and get a report of the vehicle's history. Frequently Asked Questions (FAQs) How much does a salvage title devalue a car? As a general rule of thumb, you can expect a salvage title to knock at least 20% to 40% off the resale value. Keep in mind that some salvage title cars will run well, while others might not run at all, so it's best to get a salvage title privately appraised to determine the market value. How do you check if a used car is a salvage title or not? The National Motor Vehicle Title Information System has a list of government-approved data providers for these sorts of situations. If you're considering buying a used car, you can check the history with one of these providers to learn about salvage titles, previous sales, and more. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. New Jersey Motor Vehicle Division. "Salvage/Rebuilt Vehicles." State Highway Patrol, Ohio. "Salvage & Self Assembled Vehicle Inspections." Michigan Legislature. "Michigan Vehicle Code (Excerpt) Act 300 of 1949 - Section 257.217c." Progressive. "What Is Comprehensive Insurance?" Kelly Blue Book. "Frequently Asked Questions: My Car's Value."