How to avoid buying a flood-damaged car

Andrew Seale, 2017-09-14

As insurers sift through hurricane-damaged property throughout the southern U.S., there's a heightened chance flood-salvaged vehicles could slip into the second-hand market north of the border. According to Cox Automotive, a half million vehicles damaged by Hurricane Harvey alone could be scrapped with more to come as a result of Irma.

But Viraf Baliwalla, car buying expert and founder of Automall Network, a brokering service for both new and used vehicles, warns that while vehicles damaged by floods are written off by insurance companies, they're typically sold at a salvage auction afterward.

"From there, anybody can buy it, any dealer or salvage yard can buy it, and sometimes they go out of the country," he says. "If you take a look at Katrina and some of the other hurricanes in the past in the U.S. there's been a lot of those cars purchased on that secondary market and then title washed."

Title washing, he explains, is when a car is moved between states with more relaxed vehicle history rule for poor communication, making it easy to re-register without the flood on the vehicle's record. After that, the car is free to be rebuilt, its history behind it.

"Sometimes they'll rip up the carpets, put all new ones in so you don't see any sort of mold or mildew," he says. "When you're buying a car for $20,000 less than what it's worth on the open market (there's) a lot you can put into it to clean it up and make it look good."

He says it might be a few months or few years before you can tell, depending on how good they cleaned it.

Joe Varkey, VP of marketing at CARPROOF, a Canadian provider of vehicle history and valuation reports, says that while it's rare these cars make it across the border, there are some ways consumers can tell if a vehicle has been flood-damaged.

"Look for a musty scent or the smell of a whole bunch of air freshener that's been applied to cover something up," he says. There are also tell-tale signs like damp upholstery, visible water lines in the trunk or cabin, unusually rusted parts in a relatively new used car like the handles, or even condensation in the dashboard or the headlights.

"After Katrina, we had inspectors actually find mud or silt settled under the seats or in the glove box where they didn't clean it," says Varkey. "Another really good give away is inexplicably non-working electronics because salt water is terrible for wiring."

While it's up to the consumer to do their due diligence when buying a used car, you can also hire a trusted mechanic or a big automotive shop like Canadian Tire to do a pre-purchase inspection.

CARPROOF provides reports in Canada and CARFAX covers the U.S. market.

Pete Karageorgos, a spokesperson for the Insurance Bureau of Canada (IBC), also points to the IBC's online tool where consumers can check a car's Vehicle Identification Number (VIN) to see if it has been reported and branded as flood or fire damaged or irreparable or salvaged.

"Our database is based on Canadian insurer who participate in our program," he says, adding that consumers should always be cautious if the deal sounds too good to be true.

Baliwalla agrees, pointing out that consumers should be wary of deep discounts and choose vehicles that have been inspected and have an intact history. "Once you see there's a huge discount you've really got asking yourself whether it's worth taking the chance."