When vehicles are crashed, stolen and stripped, or flooded beyond reasonable repair, an insurance company pays the owner a fair market value for the vehicle, takes possession of the vehicle, and issues a branded title for the vehicle that indicates the type of damage that the vehicle suffered. The new title will typically indicate one of the following types of damage: salvage, rebuilt wreck, or flood-damaged.

Once the new title is issued, the vehicle is hauled to an insurance auction. Most of the buyers at an insurance auction represent legitimate businesses such as body shops, car dealers, and salvage yards, but there are also opportunistic vehicle re-builders looking to make a quick buck. These vultures are vying to buy as many (formerly) premium vehicles as they are able, with the prospect of re-building them as cheaply as possible and selling them back into the auction circuit at a premium. Car dealers and consumers are their prey. And whenever there is a major natural disaster that produces a lot of damaged vehicles, these weasels multiply.

To maximize resale value and profit, these unscrupulous businesspeople will sometimes re-register a vehicle that has been declared salvage or flood-damaged in a state that doesn’t recognize such title declarations from the originating state, thus “washing” the title and clearing the damage from the paperwork. The smarter of the breed make sure their tracks are covered by performing this act in several states, and then ship the vehicle to a distant region for resale. Sometimes, usually when the car is stolen, they even go to the extent of assigning a new VIN (Vehicle Identification Number) to the vehicle.

Once the vehicle is re-registered and the damage is washed clean from the title, it is fed back into the auction circuit or sold directly to a consumer at a premium. At auctions, these scumbags will sometimes bring along co-bidders to drive up the price of a vehicle for maximum profit. The wrecked or flooded vehicle is sold and winds up at a local car lot, with an equal chance of landing at either a Mom-and-Pop shop or the used car row of a new car dealership.

Whether purchased by some unsuspecting dealer or consumer, the formerly damaged vehicles ultimately land in the hands of a person looking for a great deal on a nice used car. In most cases, neither the dealer nor the customer knows that they are dealing with a salvaged, wrecked, or flood-damaged vehicle because: