If you just started getting familiar with the used car market, hearing the terms “Salvage title” and “Total loss” may confuse you. People usually use these words interchangeably, but they are different.

1- If the insurance companies assume repairing a damaged vehicle after a collision or natural disaster costs more than the market value, then it is a salvage car. They offer to pay the market value to the owner instead of the repairing cost. But if you repair a salvage car yourself, getting it inspected, do the paperwork and obtain the rebuilt salvage title from the department of motor vehicles (DMV), then you can insure it again and drive the car on the roads.

Note: Depends on the state you live in and your insurance company’s policy sometime if the repairing of the damaged car costs more than 50% of the market value then it is a salvage vehicle. Also, in some states, if a stolen car never finds by the police it is a salvage title.

2- In contrary, a total loss is not a kind of title. If a vehicle cannot be repaired after an accident insurance companies call it a total loss and you cannot drive it on the roads. The only way to use a total loss car is to recycle it or sell its parts.

The department of motor vehicles (DMV) in California defines what a non-repairable vehicle is. In their website it says a total loss/non-repairable vehicle should meet one of the following criteria:

• The vehicle has been declared by the owner solely as a source of parts or scrap metal.
• The vehicle has been completely stripped (surgical strip).
• The vehicle is a completely burned shell with no usable or repairable parts.

If you have a salvage car you know they can cause problems. Most of the time the quality of a rebuilt car is less than a normal one. Besides that, many insurance companies refuse to insure a salvage car. Others may insure it but don’t offer a full coverage. In that case, you can only buy a basic liability coverage for your vehicle. It is always better to get rid of a salvage car but remember that they are worth only 50% of the resale value.

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