A vehicle that is involved in an accident is appraised by the covering insurance company or an approved mechanic. If the vehicle is appraised as being worth less than the cost of the damage, the vehicle is written off as a total loss. It is then given a salvage title and is usually sold. After restoring the vehicle, an additional appraisal is required in order for it to be declared roadworthy. After the vehicle appraisal, the salvage title on the car is removed and replaced with a rebuilt title. The vehicle is then considered roadworthy, but the standard value is between 20% and 50% less than that of an equivalent vehicle without a rebuilt title.
For more info, see Buying a Salvage Title: Facts to be Aware Of