Are you buying a vehicle that should have a salvage title...but doesn't?

The Department of Justice has created a database to identify vehicles with branded titles. Its called National Motor Vehicle Title Information System.(NMVTIS) However not all cars get reported to their database and not every state participates

Although this branding information is useful, these reports can not tell you the actual mechanical condition of the vehicle, the extent of any previous or existing accident damage, and the quality of any repairs. A professional pre-purchase auto inspection by National Auto Inspection Services will let you know the true condition of all the mechanical, body and electrical systems of a used car.

It is illegal in most states to knowingly sell a car with an improper title. In the past it has been discovered that an insurance company told state attorneys general that it couldn't be sure that tens of thousand of vehicles it had sold across the United States had the proper titles. The insurance company never disclosed exactly how the wrecked vehicles got into the marketplace. The insurance company did not become a "record" title owner of a vehicle that was declared a total loss. Instead, policyholders assigned the titles to the company. The company then reassigned the clean title to the purchaser at salvage auctions. One of these national chain auction places reported sales of over 1,000,000 cars in 2008 alone. The buyer would make the repairs to the vehicle at their own expense and sell the previously wrecked vehicle to a dealership.

By selling the vehicle with a clean title, the insurance company could make significantly more money than it could selling a salvage vehicle. Up to 13,500 vehicles with titles branded as damaged by Hurricane Katrina were reported by Automotive News in December 2006 article to have been moved to other states and now have clean titles. They choose states that do not transfer the "salvage" designation from the titles of out-of-state vehicles. In some states, the rebuilders can obtain clean titles for rebuilt vehicles that pass an inspection.

Those vehicles were among 200,000 cars and trucks that were damaged when Katrina soaked New Orleans and other parts of Louisiana, Alabama and Mississippi in 2005. At the time, those vehicles had their titles branded as flood- or storm-damaged. Approximately 20,000 to 30,000 of those damaged vehicles were moved to other states, according to a recently released survey by Experian Automotive. Forty-five percent of those vehicles were given new titles that do not indicate their flood damage.

There are about 17 states do not record the "salvaged vehicle" title designations for out-of-state cars and trucks. Among these states are; Arizona, Maine, New York, Arkansas, Michigan, North Dakota, California, Minnesota*, Ohio, Illinois, Mississippi, Rhode Island, Indiana, Missouri, Texas, Kentucky, New Jersey, and Vermont

*Minnesota does not carry forward "salvaged vehicle" designations for cars and trucks that are more than 5 years old.

The way it works...The insurance company pays the claim to the insured and then sells the vehicle to a salvage auction. The auction buys the vehicle direct or gives the insurance company part of the profits from the vehicle's sale. A 2002 Consumer Reports investigation estimated that insurance companies recovered $2.5 billion a year from the salvage sales of wrecked vehicles.