Salvaged vehicles in California have their title marked with a "salvaged" brand. In CA this means that the vehicle was involved in an accident or incurred considerable damage from another source, such as a flood or vandalism. This brand includes previously dismantled (junked) vehicles.
A vehicle becomes "salvage" when it has been wrecked or damaged to such an extent that it is considered too expensive to repair. The title, license plates, and a required fee are submitted to the Department of Motor Vehicles (DMV) and a Salvage Certificate is issued for the vehicle.
A "revived salvage" vehicle is one that was reported by the owner or insurance company as a total loss and has been restored to operational condition. After being repaired and reregistered with the DMV it is titled as Revived. In other states this may be known as a "rebuilt" vehicle.
To re-register a salvage vehicle you will need to have bills of sale for all the major and minor parts used in the reconstruction of your vehicle. Then an application for registration along with a vehicle construction statement will need to be given to the DMV. Revived salvage vehicles are also required to be inspected by the DMV or the California Highway Patrol (CHP) before DMV can issue title and registration.
So in California while salvaged vehicles may be deemed not road-worthy, a revived salvage vehicle may be registered and be driven on the roadways. It is likely when you hear about "salvage" vehicles being bought and driven by people that it is really a "revived salvage" auto. As you know laws in California require the registered owner to have insurance on their motor vehicle.
While it may be harder to find an insurance company that will insure a revived salvage vehicle, there are CA insurance providers that will do so. Most though will only allow liability and not full coverage (physical damage coverages) to be placed on the vehicle.
California does not legally allow any automobile to be on the roadways without insurance. In 2006 they have even updated vehicle liability insurance laws to include that all insurance companies are required to report insurance status information to DMV for all private use vehicle and that law enforcement and court personnel now have access to DMV records to verify that your California registered vehicle is currently insured.
Effective October 1, 2006, a vehicle's CA registration is subject to suspension if the liability insurance is cancelled, OR if the insurance company has not electronically provided evidence of insurance when a person purchases and registers a vehicle, OR if the DMV is provided with false insurance information.