(iSeeCars) - A car title is a legal document that proves you own a vehicle, much like a deed to a house.  Every vehicle sold in the United States comes with a title, and although the exact information on the document varies by state, car titles always include a vehicle’s VIN and year, make, and m odel of a vehicle as well as its odometer reading. Regardless of whether you buy a new or used car from a dealer or from a private seller, you’ll receive a car title. Along with showing proof of ownership, a car title also lets you know if a vehicle is damaged or is defective. If you’re shopping for a used car, you may come across a vehicle with a salvage title that indicates water damage. And as we approach peak hurricane season, thousands of flood-damaged cars will likely enter the market in the coming months. What does that mean and should you avoid salvage title and flood-damaged vehicles?  We have the answers. Salvage Title Vehicle: What it Means There are two categories of titles: clean and branded. A clean title means that a vehicle has a clean record, while a branded title means that a vehicle has incurred serious damage that needs to be disclosed. The most common branded title is a salvage title.  (For more examples of branded title vehicles, check out our handy guide.) If a car has a salvage title, it means that the vehicle has sustained significant damage and has been deemed a total loss by an insurance company. That most likely means that the vehicle was in a major accident, and the cost to repair the vehicle exceeds what it’s worth. In that case, the insurance company will pay out a damaged vehicle claim for the value of the car to its owner and take possession of the vehicle. Or, it could mean that the car was the victim of a severe weather event, like hurricane flooding or a hail storm. After the car gets towed to an impound lot owned by the insurance company, it's sent to a salvage auction house specializing in cars that have suffered an untimely demise. The car is most often bought by a junkyard and its parts are used for scrap metal or to repair other vehicles. Or, if the damage isn’t too significant, an auto body shop may repair and resurrect the car. If the once salvaged car passes inspection, it will be resold with a rebuilt title. (Check out our What is a Rebuilt Title Guide to learn more.) Lastly, a dealer may choose to sell the car as is in hopes that it will attract a buyer who is willing and able to repair it.  How Does a Car Become a Salvage Title Vehicle? Salvage title laws vary from state to state. For example, what one state defines as a salvage vehicle may be different in another state. However, in most states a salvage title includes a vehicle in one of the following categories. The vehicle has collision damage. The vehicle had flood damage.  Some states will specifically mention flood damage on a vehicle’s title, while others will classify flood damage as a salvage title.  The vehicle was damaged by a fire. The vehicle has sustained major damage from a storm such as hail or a tornado. The car has been stolen and recovered after the insurance company determined it a total loss. In New York State, a vehicle must be branded as a salvage if it is eight model years or newer, and if the vehicle was destroyed or received damage in the amount of 75% or more of its value when the damage occurred. In Florida, a vehicle must be labeled as salvage if an insurance company declares it as a total loss. However, the percentage for what is total loss classification varies. It can be if repair costs total as little as 50 percent or as much as 95 percent of a vehicle’s value. In most states, it is illegal to drive salvage title cars on public roads. To learn about what is considered a salvage vehicle in your state, check with your local department of motor vehicles (DMV). Dangers of Flood Damaged Vehicles Vehicles are built to get wet, but they're not designed to get flooded. A car that is the victim of flooding has likely been submerged in multiple inches to multiple feet  of water. Being flooded to that extent can wreak havoc on a car, causing anything from glitchy electronics to ruined engines depending on how much water ended up in the car. Cars deemed to have flood damage get bought back by the insurance company and are sent to the auction, where they typically are sent to the crusher. But sometimes people try to fix and flip a flood car. Just like cars with salvage titles, flood-titled cars are to be avoided. Beware of Title Washing Because states have different regulations on what constitutes a salvage car, moving the car to a state with more lenient laws can have the brand removed from the title. Because titles are issued by the state’s RMV, a vehicle will get a new title if it’s sold in another state. A title can also be rebranded by physically altering it. Some title-washing schemes involve a seller making physical changes to the paper document that remove all evidence of branding. Title washing is a federal crime and can result in hefty fines or even prison. Should You Buy a Salvage Title Car?  There are many risks to buying a salvage title car.  Here is what you should look out for.  Safety Risks: The main downside to buying a salvage title car is the inherent safety risk. Because these cars have incurred significant damage, there’s a chance that they haven’t properly been repaired. Even if the car has been completely rebuilt and passed an inspection, it may not have been repaired well. There are safety hazards that an inspection cannot determine such as if the airbags will deploy in the event of an accident.  Risk of Fraud: Sellers of salvage title cars will likely claim that the damage was minor because they will be desperate to make a sale. Salvage titles are as-is sales, so there is no warranty protection when buying a salvage vehicle.  Difficult to Insure and Finance: Some insurance companies will not provide coverage for salvage title vehicles, while other insurers will only provide limited coverage at a high premium. Many banks and lenders also won’t provide auto loans for salvage title vehicles. Low Resale Value: When it comes time for you to sell or trade-in the vehicle, it will have a low resale value. Some dealerships don’t buy salvage vehicle cars, so you may have trouble getting rid of it. In some circumstances, there can be benefits for car buyers when purchasing a salvaged vehicle.  Significant Savings: You might come across a vehicle that has only had cosmetic damage such as from a hail storm. As a result it will be significantly discounted.   If You’re a Mechanic: If you have the ability to fix a car, then buying a salvage title car doesn’t come with the same risks. You could either use the parts to fix other cars or repair the car so it’s operable again. How to Know If a Car Has a Salvage Title Before purchasing a used car, it’s important to obtain a vehicle history report such as Carfax or Autocheck and to run a VIN check. The iSeeCars VIN Check report provides a comprehensive analysis that includes up to 200 data points to help answer all the questions shoppers should have before buying a used vehicle.   The iSeeCars VIN Check provides title information depending on the state DMV. It will let you know if the vehicle has a clean title or if it has a salvage or other type of branded title.  The comprehensive report will link to vehicle history reports from CarFax and AutoCheck, and in many cases they will be free. The vehicle history report will provide detailed information about the vehicle’s title. For example, if a salvage certificate was issued after an accident, the vehicle history report will provide details about the accident and where the vehicle sustained damage. If the price of a used car seems too good to be true, you should do your research to see if it’s because it has a salvage title. It’s important to know this information early in the process before you get too attached to the vehicle. The Bottom Line Buying a car with a checkered past in the form of a salvage title comes with many risks. Although a salvage title vehicle may seem like a good deal, the potential safety risks likely outweigh the savings. The added insurance costs and lack of financing options also detract from the car’s upfront cost. There might be the occasional diamond in the rough that was properly repaired or only had minor damage, but flood-damaged cars should be avoided at all costs. While it is important to have every used car inspected by a trusted mechanic before purchasing, this is especially important if you are considering purchasing a salvage car. A mechanic can pay special attention to the areas of the vehicle that were damaged to see if they have been properly repaired. More from iSeeCars.com: Buying a Car Out of State: What You Should Know 24 Things to Keep in Your Car What to Look For When Buying a Used Car If you’re ready to take to the web for your own car buying process, you can search over 4 million new and used cars with iSeeCars’ award-winning car search engine that helps shoppers find the best car deals by providing key insights and valuable resources, like the iSeeCars VIN check report. You can also filter by title, ensuring the cars you find have clean titles. This article, What is a Salvage Title or Flood-Damaged Car? Originally appeared on iSeeCars.com ...read more read less