What is a Salvage Title? What buyers should know about flood-damaged cars

(iSeeCars) – A car title is a legal document that proves you own a vehicle, much like a deed for a house. Every vehicle sold in the United States comes with a title, and while the exact information on the document varies by state, auto titles always include a vehicle’s VIN and year, make and model, and its mileage. Regardless of whether you buy a new or used car from a dealer or from a private seller, you will receive a car registration document.

In addition to proof of ownership, a car registration document also tells you whether a vehicle is damaged or defective. When you buy a used vehicle, you may come across a vehicle with a salvage title indicating water damage. And as we approach peak hurricane season, thousands of flood-damaged cars are likely to hit the market in the coming months. What does this mean and should you avoid salvage titles and flood damaged vehicles? We have the answers.

Salvage Title Vehicle: What It Means

There are two categories of titles: Clean and Branded. A clean title means a vehicle has a clean record, while a branded title means a vehicle has sustained serious damage that needs to be disclosed. The most common brand title is a salvage title. (See our handy guide for more examples of branded vehicles.)

When a car has a salvage title, it means the vehicle has suffered significant damage and has been classified as a total loss by an insurance company. This most likely means that the vehicle has been in a serious accident and the repair costs will exceed the value of the vehicle. In this case, the insurance company pays out vehicle damage equal to the value of the vehicle to the owner and takes possession of the vehicle. Or it could mean that the car was a victim of a severe weather event such as a hurricane flood or hailstorm.

After the car is towed to a repossessed insurance company property, it is sent to a salvage auction house that specializes in cars that have suffered untimely deaths. The car is most often bought at a junkyard and its parts are used as scrap metal or to repair other vehicles. Or, if the damage isn’t too bad, a body shop can repair and revive the car. If the car, once recovered, passes the inspection, it will be resold with a rebuilt title. (Check out our guide What is a Rebuilt Title to learn more.) Finally, a dealer may choose to sell the car as-is in hopes that it will attract a buyer who is willing and able to fix it.

How does a car become an accident vehicle?

Property salvage laws vary from state to state. For example, what one state defines as a recovery vehicle may be different in another state. However, in most states, a salvage title includes a vehicle in one of the following categories.

  • The vehicle has accident damage.
  • The vehicle had water damage. Some states specifically mention flood damage in a vehicle’s title, while others classify flood damage as a salvage title.
  • The vehicle was damaged by a fire.
  • The vehicle was severely damaged by a storm such as hail or tornado.
  • The car was stolen and recovered after the insurance company determined it was a total loss.

In the state of New York, a vehicle must be marked as a crashed vehicle if it is eight model years or younger and the vehicle has been destroyed or suffered damage equal to or greater than 75% of its value when the damage occurred.

In Florida, a vehicle must be marked as a wrecked vehicle if an insurance company declares it a total loss. However, the percentage for the overall loss classification varies. This can be the case if the repair costs account for only 50 percent or up to 95 percent of the vehicle’s value.

In most states, it is illegal to drive salvage-titled cars on public roads. To learn what is considered a recovery vehicle in your state, contact your local DMV.

Dangers from flood damaged vehicles

Vehicles are built to get wet, but they are not designed to be submerged. A car that has been hit by a flood is likely to be submerged in water from several inches to several feet. A flood of this magnitude can devastate a car and cause everything from defective electronics to wrecked engines, depending on how much water ended up in the car.

Flood damaged cars are bought back by the insurance company and sent to the auction where they are usually sent to the crusher. But sometimes people try to fix and flip a flood car. Just like salvage-titled cars, flood-titled cars are to be avoided.

Beware of title washing

Because states have different regulations about what constitutes a crashed car, taking the car to a state with more lenient laws can result in the mark being removed from the title. Because titles are issued by the state’s RMV, a vehicle will receive a new title if it is sold in another state.

A title can also be renamed by physical modification. Some title washing schemes involve a seller making physical changes to the paper document that remove all evidence of branding.

Title laundering is a federal crime and can result in large fines or even imprisonment.

Should You Buy a Salvage Title Car?

Buying an accident car involves many risks. Here’s what to look out for.

  • Security Risks: The main disadvantage of buying a salvage vehicle is the inherent safety risk. Since these cars have suffered significant damage, chances are they were not repaired properly. Even if the car has been completely rebuilt and inspected, it may not have been repaired well. There are safety risks that cannot be identified during an inspection, e.g. B. whether the airbags are deployed in an accident.
  • Risk of fraud: Sellers of salvage-titled cars are likely to claim that the damage was minor because they will be desperate to make a sale. End-of-life vehicles are actual sales, so there is no guarantee protection when purchasing an end-of-life vehicle.
  • Difficult to insure and finance: Some insurance companies do not provide accident vehicle coverage, while other insurers only offer limited coverage at a high premium. Many banks and lenders also do not offer car loans for end-of-life vehicles.
  • Low resale value: When it comes time for you to sell or trade-in the vehicle, it has little resale value. Some dealerships don’t buy salvage cars, so you may have trouble getting rid of them.

There may be advantages for car buyers when buying an end-of-life vehicle.

  • Significant Savings: You might come across a vehicle that only has cosmetic damage, such as from a hailstorm. As a result, it is significantly discounted.
  • If you are a mechanic: If you are able to repair a car, buying a salvage car doesn’t involve the same risks. You can either use the parts to repair other cars or repair the car to make it operational again.

How can you tell if a car has a salvage title?

Before purchasing a used vehicle, it is important to obtain a vehicle history report such as Carfax or Autocheck and perform a VIN check. The iSeeCars VIN Check report provides a comprehensive analysis with up to 200 data points to answer all the questions buyers should have before buying a used car.

The iSeeCars VIN Check provides title information depending on the state DMV. It will tell you if the vehicle has a clean title or if it has an accident or other branded title.

The comprehensive report will be linked to CarFax and AutoCheck vehicle history reports and in many cases will be free. The vehicle history report provides detailed information about the vehicle title. For example, if a salvage certificate was issued after an accident, the vehicle history report will include details of the accident and where the vehicle was damaged.

If a used car’s price seems too good to be true, you should do some research to see if it’s because it has a salvage title. It’s important to know this information early in the process before you become too attached to the vehicle.

The final result

Buying a car with a turbulent past in the form of a residual security involves many risks. While a salvage vehicle may seem like a good deal, the potential safety risks likely outweigh the savings. The additional insurance costs and lack of financing options also reduce the purchase costs of the car. There may be the occasional diamond in the rough that has been properly repaired or had only minor damage, but flood-damaged cars should be avoided at all costs. While it’s important to have any used vehicle checked by a trusted mechanic before you buy it, this is especially important if you’re considering a salvage vehicle purchase. A mechanic can pay particular attention to the areas of the vehicle that have been damaged to see if they have been properly repaired.

More from iSeeCars.com:

When you’re ready to use the internet for your own car buying process, the award-winning iSeeCars lets you search over 4 million new and used cars car search engine This helps buyers find the best car deals by providing key insights and valuable resources like iSeeCars Check chassis number Report. You can also filter by title to ensure the cars found have clean titles.

This article, What is a salvage title or flood damaged car? Originally published on iSeeCars.com

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