Im not sure who told you that they go straight to the crusher, but we buy through IAA and Copart up that way sometimes, and theres alot of flood cars listed and some are from NJ, and with rebuildable titles. Its all about money, they know it will probably bring more at the sale than what you would buy it back for. I'm actually wanting to pick up a flooded gto or g8 for my wife and theres quite a few of each up there, and there will be lots more vehicles to be listed in the up coming months. They are alot of work but can be made nice again. I usually buy one flood and then one that rolled really hard and destroyed the body and take the guts out of it and put it in the flood car. Now as far as the crushing goes, I have heard that new cars that get flooded get crushed, I think they just save the tires and thats it. The car companies dont want brand new cars being sold for less than half by a rebuilder than what they're selling them for. Sometimes the used cars do get a junk title, certificate of destruction, or parts only title but that all depends on value, state, and insurance company. If your adjuster told you its getting crushed hes just talking out his a$$, they would get back maybe $300 for scrap metal, but at the sale it will bring a few thousand.
I just checked again to make sure I was right, and in the first 3 pages of flood cars on Copart there were about 10 flood cars with New Jersey rebuildable titles. I do remember buying flood vehicles out of NJ too. If you really want to buy it back you need to get ahold of someone else with your insurance company. I got to warn you, they are an a$$ load of work though.