Hi DM
After reading the thing on the VSF website I found this line
The program supports also one optional DAMAGE file which is used when the vehicle is broken, this file is called broken.x
I have not tried it out myself yet but will be trying it tonight and will post the results here
Edit:
I have just created a damage model of one of my locos by removing the buffers and naming it broken.x then placed it in the vehicle folder then loaded it. I set up a situaltion where my loco was heading straight for a building, Before the crash the loco had buffers but as soon as the loco hit the building the vehicle said it was broken and it was missing the buffers and it is an instant change with no loading and seems to work quite well so it turns out VSF supports damage models