Differences Between Previous Damage Titles and Salvage Titles

What's different between a previous damage title and a salvage title?What’s the difference between a previous damage title and a salvage title? If you’re asking that question you’ve probably been to an auto auction or searched for used cars in an automotive sales periodical. Confusion over these two titles is common among average drivers who don’t normally deal with these kinds of cars. This article attempts to answer the question while giving additional information to aid car buyers in making the right choice.

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The first thing to understand is that all motor vehicles in the United States are required to have some sort of title document. The title document proves ownership of the vehicle and is transferred from one owner to the next until the car no longer physically exists. Titles also contain information on possible lien holders; those who hold a financial interest in the vehicle due to providing a loan or other assistance towards its purchase.

What kinds of cars receive salvage or previous damage titles?

In the case of both previous damage and salvage titles, a car in question has received some sort of damage significant enough that the car insurance company declared it a total loss. In other words, it was less expensive for the insurance company to replace the vehicle than to have it repaired. Most commonly this sort of extensive damage is incurred during an accident. But fires, floods, and all sorts of other natural disasters can also cause such damage.

The only difference between the two types of titles rests in whether or not the car has been rebuilt.

If you’re buying a damaged car which has had little or no repair work done to it, it will have a salvage title. The salvage title doesn’t necessarily mean the car is un-repairable, it merely designates the fact that no repair work has been done. When a salvage car is rebuilt to the extent that can be put back on the road, it is then given a previous damage title. In some states, these documents are known as “rebuilt” titles.

Should I stay away from a car with a previous damage title?

What is a previous damage titleThe answer to this question depends a lot on the type of car and the repairs that have been done. Some cars with a lot of damage may not be able to be repaired to the point where they are similar to when they were new, but other may be fixed well enough.

When looking to buy a vehicle with a previous damage title, it is important to try to find out what the damage was and what parts of the car or truck were affected by the damage. For example, if the damage was to the entire rear part of the vehicle, and the entire rear was replaced and repaired, it may be safe to purchase that vehicle.

However, if the damage was not completely fixed or addressed by repairs, you may choose not to move ahead with purchasing the vehicle.

Can a previous damage title or salvage title ever be replaced with a standard one?

Both kinds of titles serve the purpose of making sure all subsequent owners of a vehicle are aware of previous damage. Therefore, it is not possible to have these titles replaced with standard ones at any point in the future. Doing so would make it much more difficult to determine the past history of the car. This is one of the reasons that rebuilt wrecks are so infrequently restored and put back on the road.

One exception to this rule is an undamaged car that might be found at a salvage yard simply because of its age.

An old muscle car, for example, can be stripped down and restored if it’s in good condition. Such cars can be given a clean title as long as they haven’t sustained significant damage. Regulations regarding these types of situations are different from state to state, so it’s best to check with your motor vehicle department for specific details.

How does a previous damage title or a salvage title affect insurance coverage?

previous damage title vs salvage titleThe question of insurance for salvaged or rebuilt cars is an important one. Damaged cars that will be parted out by a salvage yard really have no value except as inventory for the business. Therefore, it wouldn’t be possible to carry a traditional auto insurance policy on such a vehicle. Salvage yards typically cover these vehicles as part of their overall business policy, which protects against fire, theft, and other unforeseen circumstances.

At the retail level, consumers who purchase cars with previous damage titles are getting vehicles that have sustained significant damage. Because insurance companies have no way of knowing how severe the damage was, the value of the vehicle is automatically considered to be significantly less than that of a similar, undamaged model.

Industry-wide estimates indicate that these lower values could be as high as 20% to 30%. That means a car with a previous damage title will have a much lower cash value if a circumstance dictates the insurance company replace it.

Although previous damage and salvage titles may seem to be a hassle, they are intended as protection for car buyers. Vehicles bearing such titles generally will require a larger financial investment and more care by any future owners. Knowing this ahead of time is important in deciding whether or not a previously damaged car is right for you.

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