After devastating back to back hurricanes Harvey and Irma, many water damaged cars will eventually make it to the used car market. With Hurricane Harvey, which brought the loss of 40,000 homes, survivors of the storm now also must deal with the loss of many thousands of vehicles. Ninety four percent of all households had cars, and up to one million vehicles in the Houston area were totally destroyed. This is particularly distressing, because Houston, like many large American cities, is very much automobile dependent.
According to Andrea French, executive director of Transportation Advocacy Group Houston, “You really have to have a car if you’re in Houston.” Insurance companies report receiving 100,000 claims for these vehicles, most of which were a total loss, and the cost of these losses are estimated to be between $2.7 and $4.9 billion.
As Houston residents seek replacement vehicles, rental and sales agencies are responding to the crisis. Katie McCall, head of communications for Avis states, “We are moving vehicles into the affected areas as quickly as possible.” Other rental companies such as Hertz are extending their hours of operation, and waiving most of the extra fees associated with rentals.
Also, car dealerships that escaped hurricane damage are seeing a large increase in business, and assure customers that there is plenty of inventory. While this is comforting news to those with insurance that covers flood damage, there is another part to this story that isn’t so positive.
According to the Insurance Council of Texas, 15% of vehicles owners in Texas have no insurance at all. Of those owners who do have insurance, only 75% have enough to cover flood damage. Thus, many affected by the recent flooding in Houston, are unable to replace their vehicles. Add these facts to the desperate need for cars in Houston, and we have a formula for another peril for drivers in the area, and in other states as well.
Fred Britton, owner of the Texas-based Public Auto auctions, says definetly “flooded vehicles will be showing up on the market. Cars that have been submerged are almost certain to be totaled: water can wreak havoc on the engine, exhaust, electrical systems and computer controls.” And, sellers of these damaged vehicles have developed ways to hide the fact that they have been in a flood or are salvaged for other reasons by removing the flood history from the vehicle titles. In a recent warning from the Arizona Department of Transportation, “vehicles damaged by floodwater are likely to find their way to Arizona and other states to be offered to unsuspecting buyers.”
Just like after Hurricane Katrina in 2005, flood damaged vehicles from Hurricane Harvey in Texas and Irma in Florida will appear on the market, most likely in other states than Texas and Florida. ADOT’s Office of Inspector General, which investigates fraud involving titles and vehicle sales, states that “Flood-damaged vehicles that have been repackaged and dressed up are a common scam after major weather events like what we’ve seen recently.” Thus, “Buyer Beware and Buyer Be Vigilant” are principles to be observed in the post-hurricane auto market, especially in private sales.
Here are some tips from ADOT to make sure you don’t end up with a salvaged vehicle:
- Doing research on used vehicles can save you major headaches. Following your nose can help lead you away from buying a car that spent time underwater.
- First, check out all of the vehicle’s nooks and crannies. Look inside under the carpet and floor mats and examine the trunk for dirt, silt and mold. Check under the dashboard and other hard-to-reach places as well. Criminals usually don’t clean all of those places. Finally, take a good whiff in those areas. Water damage leaves a distinctive smell.
- Check the electrical and mechanical components. Water wreaks havoc on electrical systems, so check to see if any of those systems aren’t working quite right. Also check the engine for signs of rust or even random new parts. Get under the vehicle and check the suspension for water damage. Any of those things could be a sign that you’re in danger of buying a flood-damaged vehicle.
- When it comes to buying any used vehicle in a private sale, it’s important to take the time and ask lots of questions. There are no dumb questions in a big purchase like this. If the seller is acting suspiciously, being evasive or uncooperative, walk away. Take the time to find the right purchase.
Here are some additional tools to help you in purchasing that used vehicle:
- The National Motor Vehicle Title Information System (NMVTIS) is a national vehicle database established to help protect consumers from vehicle related fraud. You can obtain information on the vehicle’s title, history and condition by obtaining a vehicle history report from an approved provider.
- An Arizona Lien Motor Vehicle Inquiry is available to check for liens and unrestricted financial obligations on an Arizona-titled vehicle.
- The National Highway Traffic Safety Administration website will provide information on vehicle safety ratings and vehicle recalls.