After Hurricanes, Beware of Flooded Cars for Sale
Hurricane Ida may have passed, but there's a chance the used car you have your eye on could have been damaged by it. Here’s what to watch out for.
Consumers will want—and need—to replace the thousands of vehicles destroyed by Hurricane Ida. But this storm wreaked its destruction during what was already a time of intense competition for new and used cars at a time, with historically low inventories; and shoppers can expect even higher prices, at least regionally. Plus, a long-standing consumer hazard is likely to re-emerge: storm-damaged vehicles making their way into that tight market.
“Hurricane Ida and the likely loss of vehicles due to flooding could not have come at a worse time for an industry already grappling with historic inventory issues,” said Kevin Roberts, director of industry insights and analytics for CarGurus. “With flooded vehicles probably needing to be scrapped we’ll likely see an exacerbated inventory shortage along Ida’s path, particularly in the Gulf and Northeast, which could further increase prices above already high levels.”
Hiding flood damage is against the law
When cars are flooded, the bodies can rust prematurely, wiring can become brittle, and both electrical and mechanical systems can be affected. If there’s enough damage, insurance companies will declare them total losses and pay claims for the value.
Cars that are declared to be total losses are usually retitled with their state’s department of motor vehicles, and the new titles will disclose that the vehicles have been flood-damaged.
In many cases, those cars will be sold to companies that dismantle them and resell usable parts. But sometimes people try to sell these cars without revealing the flood damage, which could create big risks for the buyers.
Tully Lehman, public affairs manager for the National Insurance Crime Bureau, said to expect people with storm-damaged cars who don’t have comprehensive-coverage insurance that covers flooding to try to clean up damaged cars and sell them to unsuspecting buyers.
“Unfortunately, following major hurricanes or flooding events, we see fraudsters try to scam consumers by selling cars damaged in the flooding,” Lehman said.
How to avoid buying a flood-damaged car
If you’re buying a used car—especially one a few months after a major flooding event—be sure to take a close look. Your own eyes (and nose!) can help. Signs experts say you should look for include water stains, mildew and sand or salt inside vehicles, under the carpets and in luggage and engine compartments. You may need to open access panels to see areas where water would have accumulated. Of course, a mechanic’s inspection is always a good idea when buying a car, and if you suspect unreported flood damage, ask them to look for that as well as part of their process.
But documentation can help, too. Experts also advise using a service, such as CarFax, AutoCheck and VINCheck (offered for free by the National Insurance Crime Bureau) to check vehicles’ histories for red flags. CarFax’s free Flood Check reports whether a car has a flood or salvage title from the state DMV, was declared a total loss by the insurance company, or was reported as flooded by repair shops. And Experian’s AutoCheck’s free flood risk check will show if the vehicle has been titled/registered 12 months prior in a county that has been identified as requiring public and individual assistance (FEMA categories A and B) for a FEMA-declared major disaster.
These services aren’t foolproof. Flooded vehicles won’t show up in the databases if they weren’t fully insured, or if repairs were done without a claim being filed.. Also, sometimes crooks take the autos to different states, switch the VINs and retitle the cars, so the damage won’t show up in a search, in a process called title washing.
Most of the time, Lehman noted, it’s against the law to pass off a flood-damaged vehicle to an unsuspecting buyer. “Regulations vary by state, but in general vehicles ’totaled out’ by insurers because they have received a certain amount of damage are issued a salvage vehicle certificate, or salvage title,” Lehman said. “Some states take an additional step and add a title brand to the title for the reason why it was damaged. In other words, if damaged in flooding that would be marked as such in some states.”
But private sales aren’t as regulated, Lehman noted. “A private seller is not supposed to lie. If purchasing a vehicle from a private seller, get everything in writing as you may have some recourse should anything turn out to be false.”
When purchasing a used car, you should always check the VIN to be sure it matches what you’re being told by the seller.
For example, a VIN can provide vehicle history, but also make, model, year, color and engine. So alarm bells should sound if you’re told the car you’re buying is a blue 2006 Honda Accord, but when you look up the VIN it says it’s a 2004 or that its color is black.
“It could be an honest mistake by the seller, or perhaps not,” Lehman said. “In this case, best to walk away.”