When a vehicle is branded "salvage" in the state of CA it should be viewed as a red flag for any potential buyer, but when done correctly, a salvage vehicle can be a very smart buy. The example above is just one way to show you the difference in cost between a clear title market value vehicle and a vehicle that has been repaired after an insurance company has deamed it a total loss. The term "total loss" doesn't necessarily mean that its unsafe, it just means that the numbers didn't work for the insurance company and its better for them to sell the vehicle at auction than to pay to have it fixed at a body shop.
Insurance companies will try to spend the least amount of money possible to fix a vehicle but the body shop has to make sure the repairs are done right because they have to warranty the work. This drives the cost up. Expensive shop labor rates, new parts have to be used in some cases, and every little bit of damage has to be fixed. When a vehicle is purchased at a salvage auction and repaired by an individual, they can save money by doing some of the work themselves, use good used parts and decide whether or not they want to fix the small cosmetic issues that most people don't notice. This can save thousands of dollars.
For an explanation of how the numbers work, please continue reading here