All Salvage Titles Will Be Junk Parts Only Vehicles

Understanding Salvage Titles
Have you been purchasing vehicles with salvage titles at Copart or IAA, or perhaps through a broker like Bidmas Auto Bid Buy? Salvage titles signify that an insurance company has paid a total loss claim on a vehicle, usually due to theft, collision, or flooding. Unlike typical insurance claims for repairs, salvage titles indicate that the insurance company now owns the vehicle.

Auctioning salvage vehicles
Insurance companies, reluctant to keep these salvaged vehicles, sell them through auctions such as Copart or IAA. While many of these vehicles can be repaired and put back on the road, insurance companies are increasingly turning away from salvage titles to avoid potential liabilities associated with accidents involving previously salvaged vehicles.

Rise of Junk Titles
Rather than issuing salvage titles, insurance companies are now opting for “junk titles” or “Partson titles.” These designations, varying by state, make the vehicle ineligible for future titling. The VIN number is entered into the national motor vehicle title information system, creating a permanent ban on titling or registering the vehicle anywhere in the country.

Liability Concerns for Insurance Companies
Insurance companies fear the potential liability associated with bringing salvaged vehicles back on the road. If a previously salvaged car is involved in an accident, legal repercussions may follow, leading to lawsuits against the insurance company that originally owned the vehicle. To mitigate this risk, insurers are increasingly opting for junk titles to permanently bar these vehicles from returning to the road.

Market Implications
This shift in insurance company practices is influencing the market for salvage vehicles. Despite receiving similar amounts at auctions for both salvage and junk titles, insurers are increasingly labeling vehicles as “Parts Only.” It’s anticipated that within a year or two, all vehicles sold at these auctions will bear a Parts Only designation, completely eliminating salvage titles.

Stricter DMV Inspection Policies
In response to this trend, some state DMV inspection policies are already rejecting salvage title inspections. Even if a salvaged vehicle is fully repaired and meets all requirements, states are becoming reluctant to allow these vehicles back on the road, further complicating the process of obtaining a salvage title.

Unseen Damage to Recovered Theft Vehicles
Recovered theft vehicles, initially labeled salvage or junk, often appear to have minimal damage. However, insurance companies refrain from selling them as clean titles due to uncertainty about potential hidden damages. This caution stems from unknown factors, such as stolen airbags or structural damage, leading insurers to opt for Parts Only designations.

Flooded Cars and Parts Only Designation
Even flood-damaged cars with no apparent physical damage may receive a parts-only designation. Smells of mustiness or surface rust on brake rotors may be present, but as long as there’s no visible physical damage, insurance companies categorize these vehicles as parts only.

Caution for Buyers
Buyers considering vehicles at Copart or IAA in the coming years should be aware of the evolving landscape. The prevalence of salvage titles is diminishing, making way for parts-only designations. It’s crucial for buyers to exercise caution, avoiding purchases unless a clear salvage title is present. Failure to do so may result in being unable to obtain a title for the purchased vehicle, causing financial loss and legal complications.

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