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I've got a bunch of different faction colors and was wondering...

 

Does it matter which flag I use when attacking ships? Do flags have any impact on reputation with the attacked faction (like losing reputation attacking Vailian Trading Co ships with Watcher colors)?

 

I know that a flag can be used early on for a quest and there may be more of those. What I'm curious about is the open world naval combat impact.

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Flag allows you to sail on certain area without getting attacked because you are part of their faction. You don't really lose anything for attacking bounty ships. I just name my ship SS Furfest with Purple Fox as my flag because it's hilarious.

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