Flood-damaged cars: Don't get soaked
Here's how to protect yourself and avoid buying a flood-damaged car or truck.
Whether it's post-Sandy news reporting from New Jersey or an update on spring flooding in the Red River Valley, the images are similar: inundated neighborhoods, cows in boats — and submerged cars. We hope the neighborhoods are cleaned up quickly and the cows returned to pasture, but what happens to all those cars? According to the vehicle-history reporting service Carfax, Hurricane Katrina in 2005 claimed more than 600,000 vehicles. In 2008, Hurricane Ike left more than 100,000 vehicles under water in Texas and Louisiana. Just this summer, Hurricane Isaac, a much smaller storm, left behind 3,000 flooded vehicles in Louisiana, according to State Farm Insurance. Carfax estimates that more than half of these flood-damaged cars end up back on the road, often in the hands of an unsuspecting owner many states away.
Flood cars not easily identifiable
"It is often not easy to identify a flood-damaged car," says Bailey Wood, spokesman for the National Automobile Dealers Association. "People who try to resell these cars purchased from insurance auctions may have done a very good job of cleaning the vehicle and know how to remove a flood 'brand' from the title. No reputable dealer wants to sell a flood-damaged vehicle, because it's likely to have problems in the future."
It's possible to clean up and dry out a car that's been filled to its windows with nasty floodwater, but underlying problems are likely to linger. Mold grows under seats, water-soaked electrical connections corrode, a silt-contaminated transmission fails — often months after the flooding occurred.
If a car is declared by an insurance company to be "totaled" because of flood damage, the owner is compensated and the insurance company assumes control of the vehicle title. The title should then be "branded" as flood damaged, an imprint that is supposed to stay on the title after the vehicle is sold, usually at an insurance auction. The car can then legitimately be parted out or recycled, but it should not return to the road. But standards for vehicle titles are controlled by each state, and can be different across the country.
"For example, most states in the South have a title brand specifically for hail-damaged vehicles," Wood says. "But a state in the North, where hail damage is less frequent, may not even have a provision to brand a title with hail damage. So you take a hail-damaged car from the South and simply retitle it in another state, and the record of hail damage disappears. The same thing happens to titles with a flood brand."
Title washing — Watch for transfers, retitles
To "wash" a title, a vehicle may be moved around the country and retitled in several states before it is finally resold, usually at a wholesale auction attended by dealers. According to the Justice Department, Experian Automotive recently reported that in just the first six months of 2008, more than 185,000 titles were branded in one state, and then transferred and retitled in a second state specifically to create a clean title.
To stop title washing, the department is creating a national "total loss disclosure" database that will be a permanent record of vehicles reported stolen or branded as junked, salvage or flooded. This database, called the National Motor Vehicle Title Information System, is based on the vehicle identification number (VIN) rather than the title, so it can't be washed. All states, insurance carriers and junk and salvage yards are required to report to the database. When fully implemented, it will have data from every state and will be queried before any state issues a new title, making it extremely difficult to wash a flood designation from a vehicle.
Since August 2012, the database has been available to consumers through 10 data provider companies, which are incorporating the information into the reports they sell to dealers and the public. Those companies are Auto Data Direct Inc., Carco Group Inc., Carfax, CVR, Experian Automotive, Mobiletrac, Motor Vehicle Software Corp., RigDig, VINAudit.com and VINSmart. The information will include title information, the most recent odometer reading, brand history and, in some cases, historical theft data. Consumers can also get a free check for a theft or salvage brand at VinCheck, a service of the National Insurance Crime Bureau.
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The insurance companies make me laugh I buy salvage and they willingly sell flood cars through the auctions to help with there loss after paying the customer market value. The vehicle is sold for as much as they can get. It would be easy to sell it as PARTS ONLY but they just sell under the same category as a Salvage title vehicle due to light crash or theft recovery so they can get the recoup there loss and increase profits. Also if someone has been killed or very badly injured they just write BIOHAZARD on the vehicle and sell it with carnage not even cleaned as Biohazard cleaning is very expensive.
I know a case of a suicide from a gunshot to the head and the insurance company sold the car to be put back on the road after a good detail job and power washing the seats by the dodgy buyer you could not tell it had ever had a issue and that car. It did not show any history on the reports as they rely on the insurance company to tell them the information.
If they want to make sure it does not go on the road then sell it as PARTS ONLY, BILL OF SALE and cancel the title and make sure it goes to the scrap merchants.
After Katrina, State Farm (and Mercury I think) were busted by several states for dumping flood damaged cars after shufffling them around to get clean titles.
Their reply to the charges? We didn't do it to screw the public.