Vehicle Title Branding - Issues and Limitations

Issues and Limitations

In North America, vehicle licenses are normally issued by individual provinces and states. Each operates under different regulations.

In some cases, the criteria to define a "total loss" vary - some base the cutoff amount on the nominal value of the vehicle in working condition, others look instead at the value of a working vehicle minus the value of a collision vehicle as scrap, salvage or parts. The percentage of the original value at which the "total loss" label is applied also varies.

These differences are sometimes exploited by schemes such as "title washing", in which a vehicle branded as 'junk' in one jurisdiction is registered in another, moving from state to state until one state with slightly different regulations brands the same vehicle as 'salvage' but repairable. A vehicle with Arizona registration and a 'salvage' title for salt water damage would, for instance, represent a red flag as a vehicle possibly once affected by environmental conditions and events elsewhere such as Hurricane Katrina. Vehicles with salt water or hurricane flood damage often have severe corrosion and electrical problems which cannot be properly repaired, so are best avoided.

The system also depends on the insurer or the owner of the damaged vehicle to provide information needed to determine the cost of damage to apply the brand to title, despite the fact that doing so will further reduce the vehicle's remaining resale value. Costs estimates are widely variable; if one estimate is based on factory-new parts, another on new aftermarket parts and yet another based on junkyard parts, the numbers will vary widely - with further variance added based on who does the repairs. Damage to automotive unibody frames (commonly used in most cars since 1967 to save weight) requires special expertise and equipment to measure, with factory tolerances typically as tight as 3 mm (1/8").

While some vehicles (such as cars exported overseas after severe collision or damaged before the introduction of mandatory branding) may carry no warnings as to their history, others may be branded as "total loss" when they could have been quite repairable in the hands of someone willing to install used parts and do the work at a more modest price.

If a vehicle is branded as 'junk' or 'irreparable' in error, or importation paperwork indicates it as imported 'for parts', there may be no straightforward means provided in legislation to remedy these errors. These vehicles, if not exported to another jurisdiction with different regulations, will never be registerable or licensed again - even if all needed repairs are made and verified.

It should be noted, however, that such permanent records of damage do not always exist in cases where damaged vehicles retain a clear title. For example, ConsumerReports.org reported that vehicle history checks would at times produce "clean" results despite the vehicles being offered for sale as damaged on such websites as eBay.com and even eRepairables.com, a site specializing in the advertisement of salvage cars for sale.