After an insurance company pays the vehicle owner the pre-accident value of the vehicle, the insurance company becomes the owner of that vehicle. They will register the vehicle as salvage with the DMV and receive a “salvage certificate” to take it to the salvage yard.
In most situations, the vehicle will be auctioned off to a dealer, re-builder, scrapper, dismantler, or exporter. Usually, these people will buy the vehicle to be used for parts, though some may intend to resell them to the public. It is not illegal to sell a salvage car, but the seller will need to inform the buyer that the title is salvage.
It can be very difficult to get a salvage vehicle registered with the DMV in California. In order for the state to allow a salvage vehicle to become registered, the vehicle must pass a certain set of inspections and certifications with the California Highway Patrol and a brake and light inspection with a licensed automobile professional. If a vehicle does not pass inspection, it could not be registered until repairs are made.
If a vehicle has been “rebuilt” and has a new registration, it may be harder to find an insurance carrier that will provide coverage for the vehicle. However, there are some insurers in California that do provide coverage for rebuilt salvage vehicles, though this will likely only be liability coverage and not full comprehensive coverage on the vehicle.