In most states, the term "blue title", indicates a vehicle with a salvage title. However, in some states -- particularly Texas -- a blue title is a clear vehicle title.
Generally the term "blue title" comes from the fact that the paper the title is printed on is blue. In most states blue indicates a salvage title (in some states it's pink), while the clear title is printed on green paper. Car titles printed on orange paper usually indicate a vehicle was a salvage vehicle that has been rebuilt and approved by a state agency for resale.
If you're unsure what the color of title means what in your state, it's best to check with your DMV.
Texas Certificates of Title
A blue title in Texas indicates the vehicle has a clear title, verifying that it's never been in a severe accident or been badly damaged in a fire or flood to the point where an insurance company or the state has declared it inoperable.
An insurance company might sell total loss cars if they qualify as such. They can then reassign the title to the person who buys the car.
A non-repairable Texas title is orange. This title must be obtained on any vehicle that has been damaged or burned to such an extent that its only worth is as scrap metal or for scavenging parts.
In Texas, a purple title indicates a salvage vehicle. For the purposes of Texas law and the Texas Department of Motor Vehicles, a salvage vehicle means the following:
The vehicle has damage or is missing parts that would cost more to replace and/or repair than the vehicle is currently worth, or
The vehicle is coming from out of state with a salvage title that has the indications of accident damage, flood damage, inoperable or something similar
The vehicle is not an out of state vehicle with a rebuilt title or a vehicle that an insurance company has paid to repair hail damage or theft
What is a Blue title or salvage title and how do you clear it?
As we mentioned, in most states, a 'blue title' is a vehicle with a salvage title; an insurance company or state agency has determined that the vehicle has been damaged in a major accident, fire or flood. This means the vehicle is a total loss and that it would cost more to repair the vehicle than it is worth.
This doesn't necessarily mean that the vehicle actually can't be repaired, just that the insurance company doesn't see it as a smart financial decision to do so.
However, as long as the title is branded as salvage, it cannot be insured or legally allowed to drive on the road in most states. You're also unlikely to find any banks willing to finance such a car.
So, is it possible to clear a salvaged title? In short, no it's not.
What you can do is to get the title re-branded as 'rebuilt,' which means that it's legally allowed back on the road and that it can be insured.
The steps to do that are as follows:
Buy the vehicle
Repair the vehicle, i.e. fix whatever's wrong that caused it to be salvaged
Get an inspection through whatever official avenues your state requires
Complete final paperwork and submit to the DMV
If everything works out, the DMV will issue a new title that is labeled rebuilt.
One thing to keep in mind, however, is that potential buyers and insurance companies alike know that a rebuilt title means that the vehicle was formerly salvaged. Thus it's worth far less than a comparable vehicle with a clear title AND some insurance companies might take issue with insuring a vehicle that has had prior -- and serious -- damage that they believe could negatively affect the vehicle's safety in the future, regardless of the fact that it has passed your respective state's inspection process.
Also, if your vehicle was declared as 'salvage' in another state, you might have to get it inspected and approved in that state first before your state will let you register it there.
Top Things to Remember When Considering a Salvage Vehicle
There are a number of issues with buying a salvage vehicle, some of which continue to apply even after the vehicle has been rebuilt.
The first issue is financing. You will almost always need to have cash up front to purchase a salvage vehicle. Lenders are obviously leery of financing a salvage vehicle because its real value debatable.
The next issue is with insurance companies. They may raise rates on these vehicles through doubts that they are roadworthy or safe in the event of a crash. They may also reduce claim amounts if the vehicle is in an accident, saying that the vehicle incurred more damage than normal because of its prior damage. Different states have different requirements for salvage cars on the road.
Resale value is another problem as buyers are leery of salvage and rebuilt title vehicles. Many believe they're not as safe as clean-titled vehicles, are wary of their low resale value or misunderstand what a salvage title means entirely.
Are There Laws Preventing Use of a Salvage Car as a Project?
If you're planning to rebuild a salvage car, then you must show that to your state's DMV. For example, you will need to prove that your 2012 Corvette that was submerged in flood waters is not simply having its upholstery and carpet ripped out and replaced. You have to show proof that all the salvage damage was repaired and that missing or damaged parts were replaced.
In some cases, a salvage title can be issued for very minimal damage. For example, one car on a lot is flooded and the insurance company assumed that all cars were flooded. On the other hand, there are titles where the damage leading to the salvage is indicated, and you will have to prove that the damage has been repaired to both your DMV and an insurance company.
Is There Any Way to Get Fair Insurance on a Rebuilt Title?
As previously mentioned, insurance companies are leery of vehicles having hidden damage that will make them unsafe to drive or more easily damaged in an accident.
You can mitigate their concerns by thoroughly repairing the vehicle to start and then having it inspected by an ASE certified mechanic. Keep track of all repairs and take plenty of pictures. Have the vehicle put through an emissions test and any other tests relevant in your state.
One of the biggest fears with rebuilt titles is frame damage. Make sure that your vehicle is repaired by someone qualified to make those type of repairs and that they fully document the repair process.