Check Used Cars for Hurricane Damage

I saw a piece on TV about people trying to resell cars that were damaged in Hurricane Katrina. If I'm buying a used car, how can I make sure that the car didn't have flood damage?

That could be a huge problem over the next few months. More than 300,000 cars were destroyed during Hurricane Katrina, and some sat in contaminated water for more than a month before the owners or their insurers pulled them out. A few insurance companies ended up scrapping these cars so there wouldn't be any risk that they'd be resold to unsuspecting used car buyers. Progressive, for example, crushed and shredded more than 5,000 flood-damaged cars.

Many insurance companies destroyed the cars from the flood zone and sold them to salvage yards, which generally sell them for parts and notify buyers of the flood damage on the title. But many flood cars are starting to show up in the marketplace without any mention of the flooding in their titles, even though they may be contaminated, rusted or mold-infested, or their computers and systems may have been damaged by the water. Because of these potential problems, now is a particularly important time to check a used car's history before buying it.

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First, run the car's vehicle identification number (VIN) through the National Insurance Crime Bureau's flood-damage database. The NICB is working with many insurance companies, salvage yards and law-enforcement agencies to compile a list of cars that were damaged by hurricanes Katrina, Rita and Wilma. You also can check for damaged boats by looking up the hull identification number.

The NICB database doesn't list the amount of damage, but it does give you a heads up that you should get the vehicle inspected before purchasing it.

Many cars in the hurricane-affected areas, however, weren't insured and won't appear on the NICB's database, so it's a good idea to take some other steps to look up the car's history. It's always helpful to research a used car's past through CarFax ($25 for unlimited reports), which lists ownership history, odometer readings, accident reports and any title fraud. CarFax is attaching special advisories to its reports for cars that were last registered in areas that were considered a government-declared natural disaster area. Also keep an eye out yourself for cars that were recently registered in New Orleans and other areas affected by the hurricanes.

If the car has any underbody rust, moldy smell or appears to have been in an affected area during the hurricanes, have a mechanic inspect the car (the inspection generally costs $50 to $75 for a local mechanic). For more information about strategies for buying a used car and protecting yourself from problems, see "Cool Deals in Used Cars" in the February issue of Kiplinger's Personal Finance magazine.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.