is this from personal experience? or is this something you read or have thought up? i have owned multiple salvage cars and both the banks and my insurance company had no problem with them, hell when i bought my cobra with a salvage title and only asked for 11,000 they said wow you have a lot of equity in this car for any future plans if i need, car fax described my car as losing 750 value over a "clean title" and insurance told me the car is worth 100% of the value once fixed, all i have to do is show them after pictures of the car, and in many states you can even get a rebuilt title if yo have proof of the damage being correctly repaired.
This is something I have heard from others. I don't know if it is just a California thing or what.