Hurricane Sandy damaged or destroyed about 230,000 vehicles, mostly in New York and New Jersey, according to the National Insurance Crime Bureau, and it’s possible that at least some of these vehicles will end up for sale on used car lots in upcoming weeks and months. There is no law against anyone selling a vehicle that has been through a flood, as long as it’s properly disclosed.
Department of Consumer Protection Commissioner William M. Rubenstein offers some advice for potential used-car buyers.
“Some people refurbish and resell flooded cars without disclosing their histories, so it’s important for buyers to beware when buying used vehicles going forward,” Rubenstein said. “While a clever dealer can restore a flood-damaged car so that it looks almost new, buying a flood-damaged vehicle comes with a lot of risk, and for many drivers, would not be a good choice. Electrical issues, functional problems, even mold and mildew are all to be expected. Once a car is flooded, the manufacturer's warranty is usually void.”
On flood-damaged cars where the owner’s insurance company paid out the value of the car, (“totaled” the vehicle), the insurance company is then entitled to recover some of its money by taking and reselling the car, sometimes for parts or as a salvaged vehicle. Once this occurs, the car’s title must clearly indicate “salvage” and the vehicle itself may not be insured in the future under comprehensive insurance.
In some circumstances, buying a flood-damaged car makes short-term sense if you get it at a bargain price. However, when deciding whether or not the price on a flooded car is reasonable, be sure to factor in resale value, which is likely to be zero, particularly where the car was previously “totaled” and a salvage title reissued.
Fixing the Damage
To spot a flood damaged car, first check for damp seats or carpets, a mildew smell, or mineral deposits — rust or whitish discoloration — on seats, seatbelts, carpets, floor mats or door panels. You might see water droplets inside the instrument panel or gear shift knob. A heavy aroma of air freshener and disinfectant is a tell-tale sign that someone's trying to manage — and possibly cover up — a festering mold or odor problem.
Professionals who deal in flood-damaged cars often clean up all these things and perhaps even replace the seats and the carpet. Then it can be very difficult for the average buyer to have any idea that the car was flooded. Even the current title of the car provides no guarantee that the car’s history is flawless, because unfortunately, flooded and salvaged cars can be re-registered in other states with clean titles, and then re-sold without disclosing the damage. That's called title washing.
However, stronger federal regulations now make title washing less likely, according to Rubenstein.
“Since 2009, insurers have been required to register vehicles designated total losses in the National Motor Vehicle Title Information System within 30 days of the designation,” he said. “Salvage yards and self-insured companies, like dealerships and car-rental businesses, must also report totaled vehicles, and those reports can be found at vehiclehistory.gov.” The vehiclehistory.gov website tells consumers whether a vehicle has been totaled, regardless of lax state titling laws or interstate sales. Fees range up to $12.99 for vehicle history reports.
Car Fax offers a free service at carfax.com/flood. The service checks the zip code in which a car was last registered, and lets you know if it was registered in one of the flooded areas. You need the Vehicle Identification Number, or VIN to get a report. While not a perfect solution, it’s one way to spot a potentially flooded car before buying it.
VINCheck is a search tool developed by the National Insurance Crime Bureau after Hurricane Katrina. VINCheck allows individuals to check to see if a vehicle has ever been declared as salvage by one of its participating member insurance companies. It also alerts users if a vehicle is an unrecovered stolen vehicle. VINCheck is a free service available to the public at www.nicb.org. A Vehicle Identification Number (VIN) is required in order to complete a search.
“Should you buy a car that you know has been in a flood? That may depend on your circumstances,” Rubenstein said. “Should you know whether a car you are interested in buying has been in a flood before you buy? Yes, you should make it your business to find out.”