Widespread natural disasters like earthquakes and hurricanes wreak havoc on vehicles. A car tossed on its roof by a massive temblor is going to sustain a fair bit of damage, as is a car that spends a day half-submerged in a hurricane. The demand on insurers to evaluate these vehicles can overwhelm the insurance system; even though the vehicles are often supposed to be pulled from circulation due to the damage, they can slip through the organizational cracks -- whether through fraud or a simple honest mistake -- and end up on used car lots.
The salvage title is a safety device in these situations: A person trying to sell a flood-damaged car with a salvage title may face tough questions if he or she tries to sell the car and claim its title came from a theft or other non-damage reason. But water damage can be hard to detect in a vehicle that has been thoroughly cleaned, and it's all too easy for an unscrupulous seller to profit by selling a flood-damaged car to an unsuspecting buyer.
If a car appears to be clean, safe and undamaged, but has a salvage title and comes from a flood- or hurricane-prone region, be wary of flood damage. Checking the history of the vehicle using its vehicle identification number, or VIN, is a effective way to find out where it has been licensed and if it has been damaged [source: Lease Guide].