The Expert Podcast

So yes, salvage titles are still a problem, and there’s a lot of fraud associated with them. We’ll talk about how that works. First of all, what is a salvage title? A salvage title is a document issued by an insurance company when they have paid out a very high claim on a vehicle. It doesn’t have to be a total loss but must be a claim of significant value. Interestingly, there doesn’t have to be any damage on the vehicle; the car could be perfectly fine—no damage, nothing—and it could still have a salvage title.

The problem is that once a vehicle is salvaged, it is restricted from going back on the road. Many times, dealers or private sellers on platforms like Facebook, eBay, or Craigslist will try to sell vehicles with salvage titles without disclosing it. Buyers might unknowingly purchase these cars and then find themselves stuck. You could also buy a salvage title vehicle at Copart, but the issue with salvage titles is that you can’t insure the vehicle comprehensively. You can only get basic liability coverage, which limits your options significantly.

Before a salvage title vehicle can go back on the road, it must pass inspection every time it is sold. During this process, the vehicle is scrutinized in detail, often with a fine-tooth comb. About 90% of salvage title vehicles fail these inspections. Even if a car looks fine on the outside, issues such as airbag sensors, anti-lock brakes, frame damage, or corrosion underneath can cause it to fail. Inspectors don’t rely on cosmetics; they lift the vehicle and thoroughly examine it.

Another issue with salvage titles is the value. It’s estimated that a salvage title vehicle is worth only 50-60% of its original value. If you pay full price for such a vehicle, you’re essentially losing half your money. Unless you can buy a salvage title vehicle for half the price, already repaired, and passing inspection, you’re not getting a deal. Unfortunately, some dealerships exploit this situation. For example, the sheriff of a county recently reported that certain dealerships were selling salvage title cars to unsuspecting buyers. These vehicles might not even be roadworthy, but sellers can easily hide issues, especially in cases of flood-damaged or recovered theft vehicles.

Salvage titles represent more than just a car’s condition—they reflect the title history, which stays with the vehicle forever. If you run a National Motor Vehicle Title Information System (NMVTIS) search, the salvage designation will remain linked to the VIN for the vehicle’s lifetime. It cannot be erased or "washed" from the title. This branding affects resale, as prospective buyers will always see the salvage history. Relying on services like Carfax or Bumper isn’t foolproof, as they may contain errors. Always go directly to the NMVTIS database for accurate records.

Finally, it’s critical to understand that many vehicles with high insurance claims are categorized as “parts only” or “junk,” regardless of their actual condition. This designation is due to the insurance company’s decision to prevent the car from returning to the road. Always verify both the condition and the title history of any vehicle you plan to buy. This way, you can avoid ending up with a vehicle that may look good on paper but has a branded or distressed title that cannot be insured, financed, or sold without full disclosure.