Buying or selling a car after a disaster

Why buyers should beware

The unfortunate truth is that unscrupulous used car salesmen can make money from selling a vehicle that’s been through a natural disaster without telling potential buyers about the underlying damage. It's common practice for vehicles that have endured natural disasters, such as flooding, to be relocated to other areas of the country and sold for a much cheaper price to unsuspecting buyers.

The used-vehicle reporting service Carfax describes the phenomenon this way: “For a few shady characters, [natural disasters] only inspire them to do their worst, whether it’s price-gouging on immediate essentials or preparing flood-damaged cars for a larger, more lucrative scam.” For instance, after a vehicle suffers damage from a natural disaster, about half of them will resurface in the pre-owned marketplace. Carfax explains further, “It’s surprisingly easy for them to make a few quick, cosmetic repairs to hide the obvious marks of flood damage.” ^[1]

Common problems with flood-damaged vehicles

At this point, you may be wondering why exactly it's a problem to buy a flood-damaged vehicle — especially if you find one for a great deal. The main problem is that while you think you’re saving money and getting a deal, it’s more likely that you'll actually end up spending more money on repairs in the long run. As a reporter for Wired explains, “The problems caused by the water will almost certainly persist and eventually resurface.”^[4]

Chris Basso from Carfax discussed this on MotorWeek, saying, “These cars look great on the surface but it’s not until you get up inside and really check for signs of flood damage can you tell that the car was once under water. That’s why it’s so important to consult the experts like Carfax or a mechanic so they can spot the signs of flood damage which may not be as obvious to the untrained eye.” ^[6]

To give you a better idea of the risks, here are some of the many areas in which floods can cause damage to a vehicle, resulting in further problems (and costing more money) over time:

• Electrical system.The car’s electrical system may be compromised by floodwater. This critical component affects many other vehicle systems. Morning Call columnist Paul Muschick describes the operation of a flooded car: “Electrical components operate erratically, including power windows, power seats, power locks, sunroof, radio, Bluetooth, lights, windshield wipers, air conditioning, heat and automatic doors.” ^[7]
• Computer system. With flooding, there is a likelihood of vehicle computer problems in the long term. Once water shorts out or damages connections or metallic components of the car’s “brain,” or computer system, a host of other malfunctions can follow. 
• Transmission. Water can leak into and contaminate a vehicle’s transmission fluid, causing gear slippage, slow shifting, or other problems with the drivetrain.  
• Safety features. Airbags or anti-lock braking systems may not operate optimally after flood damage. This can be caused or compounded by damage to the electrical system.
• Lighting system. Moisture inside the car’s headlights and taillights, turn signals, fog lights, and dashboard and cab dome lights can cause short circuits, fogging, and other lighting problems.
• Windows. Once water permeates the inner mechanics and electronics of vehicle doors, windows may not roll up or down properly. Soaked upholstery in the cab may also cause excessive fogging or condensation on windows.
• Other critical components. According to Consumer Reports, “Water can ruin electronics, lubricants, and mechanical systems.” ^[8]
• Hidden corrosion. Corrosion of components also can be a sign that a car has been through a flood. Corrosion can cause a significant amount of internal damage in areas such as the battery, engine mounts, and exhaust system; or it can speed up rust of the body and undercarriage.
• Mold and mildew damage. Mold or mildew may grow in the cab upholstery of flood-damaged vehicles, making the cab an unhealthy, enclosed environment for passengers. Additionally, this can cause the vehicle to harbor lingering odors.

Another problem with flood-damaged cars is that the way they're treated is inconsistent across states. The New York Times reports, “More concerning is the situation that not all states define salvage in the same way. Vehicles that have been in floods but have otherwise little apparent damage may be returned to the road without replacement of some electrical parts.”^[9]

Other weather disasters that can damage vehicles

Although the bulk of this guide is dedicated to helping individuals after a flood (whether as a result of a hurricane, other storm conditions, overflowing of waterways, or other causes), other natural disasters can cause damage that car buyers should be aware of. For example, vehicles can be severely damaged or destroyed by fires, blizzards and hailstorms.

Winter weather

Since weather conditions vary depending on where you live, it's important that you check to see where a vehicle is or has been located. For instance, in very cold temperatures, the fluids in a car (motor oil or transmission fluid, for example) can actually freeze. Your car battery may die more easily, the pressure in your tires can decrease, and belts and hoses (which are normally flexible) can become more brittle and snap more easily than they would normally. These seemingly small issues can all lead to bigger problems if not noticed and addressed. Learn more about winter car insurance. ^[10]

Salt

A factor that often accompanies winter weather, road salt is used to prevent roads from icing over, allowing motorists to drive safely. However, salt also does damage to vehicles. Allstate explains, “Winter can cause a buildup of road salt, ice and slush that corrodes the paint on your vehicle.” If you're considering purchasing a car from a cold-weather state that likely uses a large amount of road salt during the winter, it's important to have your vehicle examined for any road salt damage before purchasing. ^[11]

Salt can also cause problems in warmer coastal climates, where cars drive in salt spray or ocean water can rise over roadways. Accuweather echoes the risks: “The biggest threat salt poses to a vehicle is rust, which is accelerated by repeated exposure to salt. Rust on certain parts of a car can create a slew of problems ranging from hydraulic brake system leaks to subframe damage.”^[12]

Storms and wind

In addition to winter weather, many types of storms can cause a great amount of vehicular damage. For instance, hail can cause dents in a vehicle’s body and even break windows. Likewise, tornadoes and hurricanes can cause harm to vehicles from falling trees and branches, as well as wind-thrown projectiles.

Does car insurance cover weather damage?

Dealing with destruction after a natural disaster can be overwhelming. Even if your home hasn’t been damaged, your vehicle may have sustained significant damage. If you have car insurance, your car damages will likely be covered, but there are some important factors to consider.

Types of damage covered by auto insurance

While most car insurance will cover “Acts of God” (damage caused by the elements) or weather-related incidents, it also depends on the type of insurance you possess. The most basic level of car insurance won't cover as much as comprehensive or all-risk car insurance. 

Generally, damages caused by hail, water, trees, and high winds are covered by car insurance. Fire damage also is typically covered; however, if the fire was a result of a vehicular accident rather than a natural disaster, it will be most likely be covered by collision insurance.

Understanding what counts as an “Act of God”

it's important to understand the difference between insurance claims for weather-related damage that is considered an act of God (i.e., unavoidable and unpreventable) versus damage that might have been prevented. 

For instance, while water damage to a parked vehicle from a flood is generally covered, your insurance company might respond differently to your claim if you drove through floodwaters. Likewise, if a tree falls on your car, your insurance provider will evaluate various mitigating factors. If the tree was already diseased or dying, for instance, your claim may be affected. Or if the tree was on a neighbor’s property, you may have to go through their insurance company.

When weather causes automobile collisions

Another weather-related insurance issue occurs most often in winter. Swinton Insurance advises, “One of the most common forms of damage caused by snowstorms is when a parked car is struck by another vehicle. If your parked car is hit, and you can identify the vehicle which hit your car, you should be able to claim on the other driver’s policy. If you don’t know who hit you, take photos of the damage and call the police to report the collision before calling your insurer to update them.”

Ultimately, the smartest approach is to review your insurance policy thoroughly to see which types of weather damage are covered.

What should you do if your vehicle is damaged and you have car insurance?

If your vehicle has been damaged by a disaster and you have car insurance, here are the standard steps you should take:

• Be safe. Wait until the environment around you is safe to check your vehicle for damage.
• Document everything. Upon checking your vehicle, be sure to take photos and document all the damage, plus evidence of any conditions that may have caused it.
• Contact your insurance provider. When you file a claim with your insurance company, make sure you provide all the pertinent information about your policy, the weather event, and all resulting damage.
• Wait for the insurance assessment. If your car has been flooded, it's likely your insurance company will declare it a “total loss.” According to Consumer Reports, “Many states have guidelines for when a vehicle must be considered a total loss. That assessment is generally a calculation of the car's value and the expected cost of repair.”
• Have a salvage title issued. Upon being “totaled out” by an insurance company, the vehicle should be issued a salvage title. Consumer Reports explains, “[Salvage] titles are usually plainly marked (known as being “branded”) with the word ‘salvage’ or ‘flood.’ In some states, this warning is shown on the title as an obscure letter or number code.”
• Salvage auction sales. Salvage-title vehicles are sold at auctions to junkyards. As Carfax describes, “Insurance payouts help owners move on, but the life of a totaled vehicle doesn’t end at the scrapyard. Usable parts can be used to repair other vehicles, such as engines, transmissions, wheels, tires, axles, doors and windows. Additionally, salvage vehicles can be bought and rebuilt.”^[1]
• Receive the insurance money. When they pay your claim, your insurance company will likely give you the car’s cash value minus your deductible. 
• Begin your new vehicle search with experience in mind. Since you’ve already experienced a car being damaged by a disaster, you don’t want to make the mistake of purchasing a vehicle that has been “title washed,” yourself.

Find below tips to protect yourself and your wallet during the car-buying process.

Signs of damage to look for when you buy a car

• Check the VIN.The National Automobile Dealers Associationsuggests checking the vehicle's title history using the National Insurance Crime Bureau's VinCheck ^[14]or the National Motor Vehicle Title Information System.^[15] (The vehicle identification number — or VIN — is located on the driver’s side dashboard; it may take a little searching to locate.)^[16]
• Inspect the interior. Examine the interior of the vehicle for any signs of water damage, as well as dirt or grit from possible flooding.
• Look for residue. Check the carpets and floor mats, under the seats, the glove compartment, armrest, storage areas, and dashboard for sand or dirt residue.
• Look for a mixture of old and new. Does the car’s interior look “newer” than the vehicle itself? This could signal that carpet, upholstery, and headliners have been replaced.
• Assess the carpets. Has the car’s interior been recently shampooed? Or does it have new carpet? Liquid can remain in car upholstery for a notoriously long time, so make sure to feel the seats and floors for moisture.
• Look for stains. Check for water residue on and under carpets, and look for stains or discoloration.
• Check for fading. Pay careful attention to the upholstery and door panels. Are they faded?
• Use your nose. Is there a musty smell in the vehicle carpet and/or the trunk? Do you see evidence of mold or mildew anywhere? Or does the vehicle smell strongly of disinfectant or air freshener, as if someone was trying to mask a smell?
• Go through the console. In the interior, do you see rust in places where water should not reach (such as the console)?
• Look at hardware underneath. Hidden spots beneath the seats may reveal rusted screws or bolts, indicating water damage.
• Investigate the seats. Does it look like the seats have been removed? In order to clean and remove carpet, the seats of the vehicle must be removed.
• Use your ears. Is there a sound when the seats are moved back and forth that may be a result of dirt or sand in the tracks?
• Test the basic functions. Put the key in the ignition and check to see if the turn signals, dome lighting, wipers, and cigarette lighter work. Turn on the ignition and test the radio, air conditioning and heating systems, plus power door locks and windows. 
• Examine extra technology. Check the dashboard, console, and doors to see whether the car’s technology is in working order, such as speakers and driver-assistance features.
• Check it twice. When you're satisfied, check the interior functions all over again. Some problems might not present themselves at first glance or only happen intermittently.
• Scrutinize the drain plugs. Have any of the rubber drain plugs been removed from the bottoms of the doors? This may have been done to drain water from the car.
• Examine the lights. Check for fogging of the headlights and taillights. Check interior lights for moisture and condensation.
• Open the hood and check for mud. Inspect for water lines inside lights, grime or mud buildup on upholstery or carpet, and musty odors, as well.^[17]
• Review the electrical wiring. Are there any signs of rust on metal wires, or do wires appear brittle? Do you see any water damage to the insulation or cloth covers? This might be especially apparent in the bundles of wires that run inside wiring harnesses.
• Search for rust. Check for any evidence of rust under the hood, throughout the exhaust system, and on the undercarriage. 
• Check the oil. If you can see into the crankcase or the oil fill tube, check to see if there’s water mixed in with the oil. 
• Beware the air. Check the vehicle’s air filter for discoloration, deterioration, or other signs of water damage.
• Look under the spare. Remove the spare tire from the trunk and check for standing water or signs of damage.
• Inspect the paint. Is there any bubbling in the car’s paint (especially in hidden areas)?

This exhaustive list should help you be able to tell if a vehicle you're considering has been through a flood. Furthermore, rather than trying to check all these things yourself, consider having the vehicle inspected by a professional.

Additional car-buying precautions

Keep in mind that even if a vehicle looks fine and seems to be working well at first, water damage may not show up for months after and can continue to cause problems until the car meets its end. This is why it's so important to take as many precautions as possible to protect yourself from buying a damaged, title-washed vehicle.

• Get a Carfax vehicle history report or order an independent used-car inspection.
• Take it for a test drive. As Carfax explains, “As with the inspection process, test driving a potentially flood-damaged used car requires a little extra effort as compared with the typical pre-owned vehicle […] It’s also particularly important to concentrate on the transmission, steering system and brakes with these vehicles.”
• Commission an inspection by a trustworthy, certified mechanic. Ask the mechanic to check for possible water damage or hidden damage.
• Check the title. The seller should be able to provide you the car’s title, which will list the VIN and should offer other clues, such as the previous owner’s address.
• Know the difference between titles. The Federal Trade Commission warns, “Understand the difference between a ‘salvage title’ and a ‘flood title. A ‘salvage title’ means the car was declared a total loss by an insurance company because of a serious accident or some other problem. A ‘flood title’ means the car has damage from sitting in water deep enough to fill the engine compartment. The title status is part of a vehicle history report. Either way, every used car needs an inspection and records before you buy, but with salvage- and flood-titled cars, you need to be extra careful.”
• Pay careful attention to the vehicle’s paper trail. Cars Direct explains, “A telltale sign of [title-washing] will be multiple registrations in different states. This may allow the owner to sneak through loopholes that allow them to omit certain unsavory parts of a car's history.”
• Use Carfax’s Free Flood Damage Check. This is in addition to the Carfax Vehicle History Report. The Flood Check shows the possibility of flood damage based on the history of the area and the registered address of the vehicle, as well as the vehicle’s reported flood history. 
• Watch for a delay. If you're considering purchasing a vehicle from a flood-impacted area, keep in mind that there may be a delay before the vehicle’s flood history appears on traditional consumer reporting sites.
• Buy from a reputable seller. You can protect yourself from buying a vehicle from a dealer with a solid reputation. Carfax suggests, “Well-established dealerships are not in business for short-term financial profit. If your community has a family-owned dealer that has been in the same location for three decades, there is a good chance they aren’t going to risk everything to make a few quick dollars selling misrepresented flood vehicles.” 
• Is the deal too good to be true? In most sales of damaged and title-washed vehicles, the price is “too good to be true.” If the vehicle is deeply discounted, it’s likely because there’s something wrong with it.
• If you suspect fraud, report it. Your vigilance and reporting any suspicions can prevent someone else from suffering the headache of purchasing a vehicle with hidden damage from a sneaky dealer. ^[18]

Even with the possibility of hidden damage, some individuals may choose to purchase a vehicle from a salvage auction. If you consider this option, proceed with extreme caution. As The New York Times explains, “Buyers who go to a salvage auction can be certain that a vehicle there has been the victim of some serious misfortune.”^[9] For this reason, it's wiser to purchase a new vehicle from a reputable seller, if possible.

What you must disclose as a seller

On the flip side, you may find yourself with a vehicle that’s been damaged in a natural disaster. If you choose to sell your vehicle yourself rather than dealing with an insurance company, there are some things you need to know.

Disclosing damage

First, it is possible to sell a vehicle that has “lived” through a flood or hurricane. According to auto regulation site DMV.org, “In most states, you, by law, must disclose whether the vehicle has been: salvaged, damaged in a flood, or rebuilt. In all three scenarios, this information should be stamped or marked on the title either as salvaged or rebuilt. This, at the very least, protects you from any potential down-the-road charges from the buyer that you concealed damage information.”^[19]

Selling a salvaged vehicle as rebuilt 

As the Tennessee Courier explains, “Keep in mind that there are lawful ways of reselling previously damaged vehicles. ‘Salvaged vehicles’ can be repaired and sold as ‘rebuilt vehicles’ so long as they comply with the applicable laws. The Motor Vehicle Commission requires that licensed dealers provide a disclosure of the vehicle’s history as previously been a ‘salvaged vehicle’ on a commission-approved form.” While these regulations apply specifically to residents in Tennessee, most states have similar laws.

Similarly, the North Carolina Department of Justice has the following regulations that apply to both dealerships and individual sellers:

“If a car has been salvaged, that information must be disclosed in writing before the car is sold. A vehicle is considered salvaged if it has been damaged to the extent that repairs to make it safe enough to drive would exceed 75 percent of its fair market value. This applies whether or not the car has been declared totaled by an insurer.

If a car has been damaged during a flood, this information must be disclosed in writing before the car is sold. A flood vehicle is one that has been submerged or partially submerged in water, causing damage to the body, engine or transmission.”^[20]

Honesty is the best policy

Ultimately, the best thing you can do as a seller to protect yourself (and be a good person) is to be honest with the potential buyer. Consumer Reports suggests, “If you’re from an area affected by a flood and have a car that wasn’t damaged, be aware that buyers might suspect it was. Have a mechanic inspect your car before you put it up for sale so that you can present potential buyers with a clean bill of health.”^[8]

How to sell a damaged vehicle

Another thing to keep in mind if you're trying to sell your car after it’s been damaged due to a natural disaster is that you do have options — but you'll have to lower your expectations. Don't expect to make as much money selling your vehicle as you would pre-disaster. You'll likely earn much less.

Sell your vehicle as a salvaged or rebuilt title

You may have the option to buy your vehicle back from your insurance provider, but it will hold a salvage title, meaning the car can be used for parts only. An option is to sell it to someone else who wants the vehicle’s parts. Alternately, if you do rebuild your car, your state may issue it a rebuilt title. However, this status has to be disclosed whenever you sell the vehicle. 

More resources

Precautions for buyers

Check a vehicle's title history using the National Insurance Crime Bureau's VinCheck or the National Motor Vehicle Title Information System. Reports may state whether a vehicle has been flood-damaged.^[15]

In addition to its regular vehicle history reports, Carfax offers a free flood damage check for used car buyers, as well. After inputting the vehicle’s identification number, you’ll get a report on any damage or repairs reported across the history of the car.^[18]

Guidelines for sellers

The Federal Trade Commission’s Used Car Rule stipulates the conditions and requirements under which dealers can sell used cars. They are required to disclose pertinent information about the car’s condition and previous ownership. However, financial institutions and other entities are not bound by the Used Car Rule. Consult the FTC’s site for more information. ^[23]

Should your vehicle experience a disaster, practice safety first; wait until conditions are safe to inspect your car. Take pictures or videos and document all the damage and possible causes. Take a few deep breaths, then contact your insurance provider to find out what insurance does and does not cover, and start the claims process. Review the information in this guide on other steps to take after a disaster, the signs that identify a flood-damaged vehicle, and how to protect your vehicle from weather disasters in the future. Once you’re ready, check the buying and selling sections of the guide to help you make wise decisions in selling or buying a vehicle.