July 14, 2013

News & Features

Superstorm Sandy fallout: Steer clear of flood-damaged cars

The Palm Beach Post

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Vehicles float in a parking lot in New York City after Superstorm Sandy hit in October. (Damon Winter / The New York Times)

If you're shopping for a used vehicle, there's a major item you need to check for besides price, color, make and model. It's something you don't want: evidence of water damage from a flood.

Last year, an estimated 250,500 insured vehicles in 15 states were damaged by floods from Superstorm Sandy, says Roger Morris of the National Insurance Crime Bureau (NICB). And the total number of damaged vehicles is actually higher, because uninsured vehicles are not reflected in the count.

The vehicles are hitting the market now. Washington state's attorney general and the Better Business Bureau recently warned that flood-damaged cars are showing up locally.
Morris says that most of the flood-damaged vehicles have been sold to dealers by companies that auction them on behalf of insurance firms. The title should state "salvage" if the car has been in a flood.

What to look for
    The NICB's tips for inspecting for water damage:
  • - Inspect the vehicle for water stains, mildew, sand or silt under the carpets, floor mats and headliner cloth and behind the dashboard.
  • - Check for rust on screws in consoles or areas water doesn't normally reach.
  • - Have a certified mechanic inspect the vehicle before you purchase it.
  • - Inspect the title and ownership papers for any potential salvage fraud.
  • - Trust your instincts; if it sounds too good to be true, walk away.

"They can be auctioned off and sold as long as they have a legitimate title that shows they are salvage vehicles. A lot have been sold for parts or were crushed," Morris says. "A lot of them are probably being shipped overseas."

The vehicles, which may have sat in up to 4 feet of salty water, are ruined.

Consumers can check a vehicle identification number for free at nicb.org (click on the VINCheck link under Theft and Fraud Awareness). The site contains the vehicle salvage records of participating NICB member insurance companies, which collectively provide 88 percent of the auto insurance in force today.

West Palm Beach, Fla., resident Michael Steffan did not visually inspect for water damage when he purchased a 2010 BMW from a used-car dealer in May. A report by Carfax, which showed the car's history, said the car was in a repair shop in New York in mid-September following an accident, the third time the car had been in a collision.

Then there was a gap in the records before the dealer purchased it at an auction in Georgia in March. Neither the title nor the Carfax report indicated the car was in a flood.

Steffan paid $34,000, $9,000 of which was for extra warranties, which he found out later did not cover water damage. "I looked for this specific car and found it at an unbelievable price," he says.

As Steffan drove the car away from the dealership, the service light came on. He took it to a shop and several inches of water were found underneath a panel in the trunk, where the battery was housed.

Mechanics found extensive water damage and estimated at least $10,000 in repairs. After negotiation, the dealer released Steffan from the purchase.

Morris says it's not possible to prove or disprove that Steffan's car was a victim of Superstorm Sandy. He says it's "buyer beware" when it comes to water-damaged vehicles. If the deal sounds too good to be true, there is probably a reason.

"A lot of these cars will be offered at an attractive price," Morris says. "You have to be smart about this. People make some rash decisions trying to save a buck."

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