A badly damaged vehicle can be categorized as a junked or salvage vehicle if repair costs are extremely high compared to the value of the car. Collision, flood damage and hail damage are common reasons for considering vehicles as junked cars.
Insurance companies generally declare a damaged vehicle as a total loss if the cost of fixing overall damage is higher than 75 to 90 percent of the car's value. State motor vehicle departments then issue a salvage certificate, which prohibits the car owner from selling, driving or registering the junked car.
In some cases, insurance companies pay off missing vehicles and sell them to a salvager for parts replacement once the cars are found. Vandalism that causes severe damage and a non-operable vehicle without resale value are other possible reasons for issuing salvage titles to cars.