Sandy's Effect on the Used Car Market

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With Sandy here and gone, consumers can look to the past for a glimpse of how the once in a hundred year storm may affect the amount of flood damaged vehicles in the used car market. Einsurance speaks with the National Insurance Crime Bureau to find out what consumers can do.

When all of the water-damaged vehicles are rounded up for this event there is a high probability that some of the vehicles will end up on used car lots.

When looking at the type of damage related to Katrina, the National Automobile Dealers Association reported that over 500,000 automobiles, trucks, and buses were affected by the rising floodwaters in 2005. Once a vehicle incurs flood damage, which is described as water that enters the vehicle and is higher than the door threshold, the vehicle is considered a total loss and must be either destroyed or sold as parts. After Katrina, where did these flood-damaged vehicles go? It is reported that after the waters receded the vehicles where collected and stored in farm fields until they could be crushed or parted out for recycling. According to Frank Scafida of the National Insurance Crime Bureau (NICB) some of the flood-damaged vehicles were repaired and put back in service by unscrupulous salvage operators. One of the methods used to put these vehicles back in service may be cause for concern among used car buyers.

Once a vehicle is deemed to be flood-damaged it should be taken out of service and either crushed and recycled for the metal, or parted out. Due to the variation in state laws when dealing with salvage titles, it is possible some of the flood-damaged vehicles were returned to service and sold as used cars with clean titles. Unscrupulous salvage operators have been known to take advantage of lax title laws in some states to obtain new clean titles for vehicles sold at auction using a practice called title washing. Mr. Scafida stated “After Katrina, NICB set up a computer database called VinCheckSM that allows any potential used car buyer to check the history of a vehicle free of charge before they purchase it. This VinCheckSM system can track 88% of all registered vehicles in all states and can help a potential buyer identify a potential flood damaged vehicle.” Although the majority of auto insurance carriers are currently contributing data to this database, it is important to note that some carriers do not currently participate in the program or fail to release flood damage data. Therefore, vehicles can slip through the cracks unbeknownst to the used car shopper.

The difference between hurricane Katrina of 2005 and Sandy 2012 is that Katrina was more limited in size and only affected the greater New Orleans area. At the current time Hurricane Sandy has affected 19 states and vehicle flood and water damage will exist in all of these states. When all of the water-damaged vehicles are rounded up for this event there is a high probability that some of the vehicles will end up on used car lots. If you are considering the purchase of a used pre-owned vehicle there are a couple of helpful rules you can follow.

-Check the Car Fax report of previous damage this can alert you any potential problems.

-Use the Vin Check on the NICB web site at This report should have the correct vehicle listed that you are considering.

-Have a trusted auto mechanic look at the vehicle and have them open up some door panels and carpeting to check for water damage.

-Use your nose. Water causes mold and mold does have an odor.

For a more detailed and downloadable checklist visit:

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Eric Powers
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