Friday, 07 May 2021 12:04

What Does it Mean to ‘Total’ a Vehicle?

Written by Gary Wickert, Claims Journal


...there will be no branded title if an insurance company’s definition of “total loss” is different from that of the DMV’s threshold requirement for a branded title, or when the owner of the vehicle is a self-insured company, such as a fleet or a rental car company.


Salvage vehicles which are repaired and the “salvage title” is removed or replaced with a “rebuilt salvage” brand so that a buyer knows that the vehicle has been purchased as salvage, repaired, passed an inspection and has been deemed as safe to drive.


While the procedure varies slightly from state to state, the insurance company will typically take ownership of the totaled vehicle, known as “salvage," and may obtain a “salvage title” for the vehicle.


After it pays its insured the pre-loss ACV of the vehicle and forwards the certificate of ownership, license plates and a required fee to the DMV, the DMV then issues a Salvage Certificate for the vehicle. In some cases, the vehicle is repaired, re-registered with the DMV, and then classified as a “revived salvage” or “salvaged” vehicle.


Of course, if the insured wants to keep the “totaled” vehicle, the insurance company will deduct the value of the salvage from the claim payment.


The detailed laws and regulations regarding whether a vehicle is considered a total loss and what sort of branding or titling requirements follow are in place in order to avoid fraud which often occurs when total loss vehicles do not get classified as salvage by insurers and other sellers or are not appropriately branded, and are not properly and swiftly reported into the appropriate state and federal databases by those entities, such as auto auctions that are handling the vehicles prior to their being offered for resale.


Unscrupulous buyers of salvage vehicles often take advantage of an undocumented damage status to then offer these cars for resale to an unsuspecting public, including instances of title-skipping, where the seller---which in many cases is a major insurance company or salvage auction company, but also can include...