What is a recovery title?
If your car is badly damaged in an accident, natural disaster, or other circumstances, your insurance company may decide it’s not worth repairing and declare it a total loss. At this point, you or the insurer will need to get a salvage title for the car, depending on who is going to take it. Here is how the title recovery process works.
Key points to remember
- A salvage title is issued when a vehicle is damaged and considered a total loss by the insurance company.
- The owner of the vehicle or the insurance company can apply for a salvage title.
- A separate reconstructed / restored vehicle title may be required before a salvaged vehicle can be resumed on the road.
- These laws may vary depending on the state in which you live.
What is a recovery title?
A car title is a legal document that shows who owns a vehicle. If you own a car outright with no loans at all, you probably have a car title in your name.
A salvage title not only indicates who owns the vehicle, but that it has been damaged beyond fair market value and declared a total loss by an insurance company.
What constitutes a total loss depends on the insurance laws in your state. For example, in Nevada, a vehicle is considered a total loss if the damage exceeds 65% of fair market value. Nevada also classifies flood damaged and non-repairable vehicles that are only suitable for scrap as salvage vehicles. In New York, on the other hand, damage must exceed 75% of the car’s fair market value.
Salvage titles tell potential buyers the type of damage that has occurred to the vehicle. This could be flood damage, fire damage, or car accident damage. The title recovery process can also ensure that a vehicle has not been rebuilt or restored with stolen or faulty parts.
How does a recovery title work?
Once a car has been declared a total loss, its owner or the insurance company can apply for a salvage title. Who will do this depends on who plans to retain possession of the vehicle.
If the owner chooses to keep a totalized vehicle, or has no insurance coverage, he would be responsible for requesting a salvage title. If the insurance company regains possession of a damaged vehicle after declaring it a loss, the insurer will apply for the salvage title.
Salvage credentials can be obtained from the State Department of Motor Vehicles. Although the process varies from state to state, it usually involves filing an application, paying the required fees, and submitting the car for a rescue vehicle review. The examination will assess the extent of the damage and the general condition of the vehicle.
A rescue inspection is not the same as a regular safety inspection or an emissions inspection. During the inspection, the examiner can do any of the following:
- Check that the Vehicle Identification Number (VIN) on the car matches the number on the application.
- Check the odometer to make sure the mileage matches the app.
- Compare the condition of the vehicle to what is indicated on the request.
- Verify that vehicle parts have not been removed, damaged, destroyed, or otherwise tampered with prior to inspection, beyond the damage that has been reported.
If you are showing up for a rescue inspection, you may need to bring certain documents with you, including your rescue document application, a receipt showing that you have paid the appropriate fees, a copy of the assessment report or damage from your insurance company and an invoice. for the cost of repairs or the parts you have purchased.
How to insure a car with a salvage title
If you have a car with a salvage title that you want to repair and get back on the road, you’ll need to consider your options for insuring it. Again, the rules may vary from state to state and from insurer to insurer.
Some insurance companies may be willing to sell you basic liability insurance for a salvage vehicle that has been rebuilt or restored, while others may not. Depending on the state, you may need to obtain a separate rebuilt or restored vehicle title that certifies the safety of the vehicle before you can purchase insurance and drive it on the roads.
If you are buying insurance, take the time to compare companies. Look at the premiums they charge for at least the minimum level of coverage required in your state. Also consider whether paying extra for a collision and full coverage is worth it, based on the estimated value of the vehicle. (Although third party liability coverage is mandatory in virtually all states, collision and comprehensive coverage, which pays for damage to your car, is optional.)
If you are considering purchasing a salvage or rebuilt vehicle, plan to have it checked out by a trusted mechanic to help you spot any potential issues before the money changes hands.
Should you buy a car with a salvage title?
If you are shopping for a low priced vehicle, you may want to consider a car with a salvage title or a rebuilt / restored title. But there are pros and cons to doing so.
On the professional side, for example, it can be quite easy to find a salvaged vehicle for much less than what you would pay for a new or more lightly used vehicle. So you might want to consider a salvage title vehicle if you need a car now but don’t have a lot to spend.
There are, however, a few drawbacks. For one thing, you might have a hard time getting an auto loan for a rescue vehicle. Lenders may be reluctant to finance a vehicle that is damaged or damaged by flooding. If you are able to get a loan, it may come with a high interest rate or a larger down payment. And again, getting insurance on this type of vehicle can be tricky.