Thousands of people filed claims with their car insurance companies after Superstorm Sandy hit after floodwaters damaged their cars. That means tons of flood-scarred cars probably will wind up being fixed and sold – perhaps without you knowing the vehicles’ history.
insuranceQuotes.com talked with Michael Wilson, CEO of the Automotive Recyclers Association, to find out what happens to these cars and what consumers should know.
How does a car become a salvaged car?
When an insurance company determines it’s uneconomical to repair a vehicle, then it’s declared a total loss. It’s easier to talk about it that way, by what an insurance company does, because all 50 states have different requirements of what a salvage vehicle is. If an insurance company writes it off as a total loss, it could get a salvage title, it could get a flood title – it just really depends.
(For example, Nevada requires that a salvage title be issued for any vehicle that has been declared a total loss by an insurer, has been flooded or has been badly burned or destroyed. Each state establishes its own requirements and its own types of titles or official designations.)
How can a consumer find out if a car they’re considering buying was once declared a total loss by an insurance company?
Go to the website of the National Motor Vehicle Title Information System. (In most cases, the system should show whether a vehicle has been declared a total loss). The consumer can type in the VIN number. It’s not a comprehensive report, so it doesn’t replace a Carfax or other private reports, but it does give a warning sign.
When do cars get recycled and what does recycling mean?
A large percentage of total loss vehicles will end up at “salvage pool” auctions (where salvage vehicles are sold). Professional recyclers come and bid on those vehicles so they can harvest the parts. Over the last 10 years, the general public has been getting into these salvage auctions. Are they curbstoners (unlicensed auto sellers) who are just going to do Band-Aid repairs with Bondo (an auto body filler) and just sell them on the curb or in some parking lot?
What’s happening to the cars totaled after Superstorm Sandy? Are they going to these auctions?
They’re going to auctions, and now there are online auctions with bidders from 100 countries around the world. About 30 percent of those vehicles are being sold to foreign bidders.
What does that mean for consumers, wherever they might be?
Cars bought by out-of-country buyers are taken to Eastern Europe, Central America or the Middle East – you name it. Once you get the car in a container ship and take it over, there’s no regulation in some of these countries. Buyers will have no idea it’s been involved in a flood in New Jersey, Connecticut or New York. And these (overseas purchasers) clean these vehicles up, spray them down and put deodorizers in them to re-sell them.
So, what will happen when people buy these cars?
You can’t talk about these vehicles in just one glob because some may have had the water just go up to the door seal and flood in, or they may have been completely submerged. And there’s a big difference between a freshwater flood or a saltwater flood, which is much more damaging because saltwater flooding tends to corrode the vehicle more over time. You could have serious problems that occur weeks or months or years later.
Will some consumers in the U.S. end up buying these cars?
The U.S. Department of Justice learned a lot from (Hurricane) Katrina. They put some mechanisms in place to clamp down on these vehicles getting sold without folks realizing what their issues are. But it’s still going to happen far too often.
Do you have any tips on how consumers can avoid that scenario?
Consumers have to be very wary about buying from Craigslist and so forth.
In most states, if you sell five or more cars per year, you need to be licensed, so check to see if a seller is licensed. If you’re willing to roll the dice, you might hit the lotto and get a nice vehicle, but a lot of times you’re going to get something that’s a problem, and there’s no dealership to go back to, to have the problem fixed or get your money back.