A salvage title is an automobile title with a notation that the vehicle has been damaged in excess of approximately 70% of its pre-accident market value. The exact percentage depends on the insurance provider and any applicable laws and regulations. This notation gets applied to a title when an insurance company pays a total-loss claim on a vehicle, but then sells the vehicle at an auction center. If the vehicle is kept by its owner through a buy-back program, then the vehicle will retain a clean title. A properly restored vehicle is still safely drivable even if it is technically considered a total loss by an insurance company, particularly with older vehicles where even minor cosmetic damage would cost more to fix than the vehicle's pre-accident market value.
There is no specific formula in most states that specifies when a vehicle is deemed salvage; this is typically decided on a case by case basis. Once the auto is involved in an accident, the insurance company then offers the vehicle back to the owner as an insurance buyback or the car is sold to insurance auction centers, such as IAAI or Copart. With an insurance buyback the owner is responsible for getting the repairs made and having the car inspected by the highway patrol or a state regulated inspection facility. At this point, the car still has a clean title, no matter of the degree of the damage done, because it was never owned by the insurance company. If the auto is not a buyback, it is towed to a salvage auction where it will be sold to an auto recycler or a rebuilder, and given a salvage title. A rebuilder can sell the car as-is or fix the car and resell it as a rebuilt salvage titled car.
Having a "Salvage" or "Junk" title only applies to the United States and Canada. All vehicles imported or exported to other countries will automatically obtain a "Clean" title, even if they have been involved in an accident.