Most used vehicles on the market today are safe, reliable, economical buys. Taking extra precautions will help you avoid getting ripped off while discouraging crooks and thieves from operating in your area.

Insurers wary of flood- and salvage-titled cars

Nicole Farr, a spokeswoman for the Arizona Insurance Council, notes that insurance coverage on vehicles with salvage or flood titles can vary from insurer to insurer and advises that consumers check with an agent or carrier before they knowingly buy a car with a flood- or salvage-title history.

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"Some insurers will not write collision or comprehensive coverage on a vehicle with a salvage or flood title but may write liability coverage," Farr says. "If a vehicle with a salvage title has not been repaired, it is unlikely that the consumer will be able to obtain coverage at all."

Because relocating a car to a clean-title state can erase both the positive and the negative information on the vehicle's history, insurers rely on third-party registration-tracking services and physical vehicle inspections to determine eligibility for coverage.

Special insurance for damaged vehicles

Insurance company representatives who declined to be identified reveal that a handful of insurers have opened special departments, staffed by experienced title investigators, where applications for coverage care be studied more carefully to determine whether a clean-titled car has been successfully repaired or whether it has been involved in a title-washing operation.

At companies that write liability coverage for vehicles with salvage titles, premiums tend to be about the same as those for similar used vehicles. Farr says, "If a consumer is able to obtain coverage, the (liability) premium is typically not affected, especially if the vehicle has undergone extensive repairs."

However, according to insurance industry sources, if an underwriter later discovers fraudulent information on a title, the insurer can cancel your insurance policy and report you to law enforcement officials.

If you want collision coverage, be prepared to pay a higher premium. "Some insurers offer a nonstandard auto policy for physical damage in this case," Farr says. Nonstandard policies indicate higher risk and are accordingly more expensive. "It is likely that the insurer will conduct an investigation on the vehicle and any repairs to see if the vehicle is insurable," Farr says.

If you unwittingly buy a gray-market vehicle and its history is revealed, you might be flagged as a high-risk driver, causing your premiums to skyrocket regardless of insurer. However, if you tried to deliberately sneak a salvage-titled car onto your policy, state insurance officials could charge you with fraud.

This article was reported by Joe Taylor Jr. for Insure.com.