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2005 Insurance Reference Manual

Personal Insurance Federation of California Insurance Reference Book

SALVAGE VEHICLES

There is much debate concerning California registered vehicles that have been declared a total loss. The debate basically asks questions about salvage vehicles and the role of insurance companies.

  1. Does the current system of selling California registered vehicles that have been salvage protect the insured person who owned the vehicle?

  2. Are consumers who ultimately buy these vehicles after they have been repaired protected by the current law?

  3. By California law, what role does an insurance company play in declaring vehicles eligible for salvage?

  4. What is the law concerning insurance companies who sell vehicles they declare as salvageable?

DEFINITIONS

1. New vehicle: California Vehicle Code §430 defines a "new vehicle" as a vehicle constructed entirely from new parts that has never been the subject of a retail sale, or registered with the DMV, or registered with an appropriate agency or authority of any other state, District of Columbia , territory or possession of the US or foreign state, province or country.

2. Nonrepairable Vehicle: a) California Vehicle Code §431 defines a "nonrepairable vehicle" as a vehicle that has no resale value except as a source of parts or scrap metal, and which the owner irreversibly designates solely as a source of parts or scrap metal; b) a nonrepairable vehicle is a completely stripped vehicle (as surgical strip) recovered from theft, missing all of the bolt or sheet metal body panels, all of the doors and hatches, substantially all of the interior components, and substantially all of the grill and light assemblies, or that the owner designates has little or no resale value other than its worth as a source of scrap metal, or as a source of a vehicle identification number that could be used illegally; c) a nonrepairable vehicle is a completely burned vehicle (burned hulk) that has been burned to the extent that there are no more usable or repairable body or interior components, tires, and wheels, or drive train components, and which the owner irreversibly designates as having little or no resale value other than its worth as scrap metal or as a source of a vehicle identification number that could be used illegally.

CALIFORNIA VEHICLE CODE SECTIONS RELATING TO SALVAGE VEHICLES AND THE ROLE OF INSURANCE COMPANIES

§432 "Nonrepairable Vehicle Certificate" is a vehicle ownership's document issued to the owner of a nonrepairable vehicle. Ownership of the vehicle may only be transferred two times on a nonrepairable vehicle certificate. A vehicle for which a nonrepairable vehicle certificate has been issued may not be titled or registered for use on the roads or highways of California.

§543 "Salvage Pool" means a person engaged exclusively in the business of disposing of total loss salvage vehicles, nonrepairable vehicles or recovered stolen vehicles sent to it by, or on behalf of, insurance companies, authorized adjusters, leasing companies, self-insured persons, or financial institutions.

§544 "Total Loss Salvage Vehicle" means a vehicle, other than a nonrepairable vehicle, of a type subject to registration that has been wrecked, destroyed, or damaged, to such an extent that the owner, leasing company, financial institution, or the insurance companies that insured the vehicle considers it uneconomical to repair the vehicle and because of this, the vehicle is not repaired by or for the person who owned the vehicle at the time of the event resulting in damage.

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