Salvage title question

[nitrous9200]

I briefly considered buying a $600 car that was considered a total loss by the current owner's insurance company and which he bought back from them. The damage was almost entirely cosmetic (dents on some panels, plus a large dent on the driver's door which can now only be opened from the inside).

I drove the car and it was in good mechanical condition, but the owner's insurance company said it would need to have a salvage title issued before it could be registered; it wasn't worth dealing with the salvage inspection process, so I passed. Still, I am curious about the whole salvage/branded title thing after doing some research.

From my understanding, a car that is totaled and bought back by the owner should have a salvage title issued. However, the owner was never given a salvage title (he only has the original title from when the car was new). This title check website shows no record of a salvage title ever issued for the car's VIN. My insurance company also said they would offer full coverage on it, rather than only providing liability.

I've never dealt with the insurance buy-back process before, so is my understanding of the salvage title process correct?
Also complicating matters, the car is in New Jersey and I live in New York. NY's title application does have a question asking whether the car was ever declared a total loss, but given that there seems to be no salvage title history for it, how would they know if I checked the "no" box? (not that I would want to risk fines/jail time to do so)

 

[mindless1]

It could vary by state, but I'm wondering if it was not issued the salvage title because it is still road worthy, that nothing needs repaired to make it so.

 

[XavierMace]

Normally if the car is declared a total loss, yes, it should have a salvage title. However, I believe some states will issue a clean title on salvage vehicle if it's passed the appropriate inspection.

 

[paperfist]

It varies by state.

In NYS if the insurance company declares a vehicle a total loss and they pay out on it then a vehicle like that can be bought back by the owner or sold at a salvage auction. In this state it is issued 907A paperwork and if you try to search the vehicle it won't 'exist' anymore. If you bring the car to a salvage (and pay the fee) inspection which is usually just a check for stolen parts and new air bags and it passes you'll get in 50 days or so a NYS branded title that says salvage on it.

Insurance companies can't deny you full coverage on a vehicle that's been rebuilt or with hold money should it ever be totaled again. Manufacturers will not however honor any warranty coverage, but they have to perform recall work.

I'd be leery of anyone that says their car was totaled for a few dents. I think in NYS a total loss is when repair cost exceed 75% of a vehicles value.

 

[mindless1]

Insurance companies can't deny you full coverage on a vehicle that's been rebuilt or with hold money should it ever be totaled again.

Is this law? I was under the impression that they could deny coverage (the initial policy agreement, not a claim) for any reason, on a whim even, so long as it wasn't a specific form of discrimination. Well by deny what I really mean is just make the rate so high that you'd be insane to agree to it.

 

[nitrous9200]

Given the age and mileage of the car (2007, 180k miles from a now defunct brand), I'm not surprised it was totaled; new body panels alone would run at least $1000-1500. The car is titled in New Jersey which doesn't have a set threshold like NY's 75%, but uses a total loss formula (I couldn't find any more specific details).

The age of the car brings up another point - the New York DMV website says they only brand titles for cars eight model years or newer. Does that mean that even after a salvage inspection, the car would get a clean title since it's well over that threshold?

 

[razel]

The insurance company was just following the rule of the law wanting a 'salvage' title to be judged for that car. These days a salvaged, new-ish car being sold for to average Joe just means it has no manufacturer warranty, except for airbags & seat belts... at least in California.

 

[monkeydelmagico]

I believe by law in NJ the insurance company is supposed to request the title prior to pay out. That being said I recently had a car totaled and they did not brand the title. Cheap old cars they just don't bother.

 

[paperfist]

Is this law? I was under the impression that they could deny coverage (the initial policy agreement, not a claim) for any reason, on a whim even, so long as it wasn't a specific form of discrimination. Well by deny what I really mean is just make the rate so high that you'd be insane to agree to it.

Not sure of other states, but in NY there was a case where an insurance company refused to pay out on a total loss on a salvage car. The customer won in court the judge saying you charged the customer full rate to insure the car so you cannot now pro-rate or refuse to pay out.

My GF owned a rebuilt car (actually most of the ones I own have been) and she totaled it and they told her they'd give her x amount of dollars less than actual value. So I called the company and told them there was a case xxxx that says what you are doing is illegal and you can't do that. They paid out full price after that.

I can't remember the case, but I'll look into it when I get back to the office.