Protect yourself against flood-damaged vehicles: Know before you buy

Vehicle in Flood WatersWhen hurricanes and floods hit, they can leave hundreds of thousands of water-damaged vehicles in their wake, some of which may ultimately end up for sale at auctions, dealerships or online across the country.

If you are in the market for a used automobile, before you open your wallet at the auction or dealership, or hit "buy" online, remember this sage advice: If a deal seems too good to be true, it probably is. Protect yourself against the headaches and expenses connected with flood-damaged vehicles. Know the following before you buy:

  • After a flood or hurricane, damaged vehicles are sometimes cleaned and taken out of state for sale to unsuspecting buyers without any indication that the vehicles are flood damaged.
  • Insurance companies may be unwilling to provide comprehensive and collision coverage on flood-damaged vehicles. Applying for a vehicle loan without comprehensive or collision coverage is extremely difficult, so a flood-damaged vehicle will probably have to be purchased with cash.
  • Electrical damage may not appear for months or even years after the flood-damaged vehicle is bought and will most likely not be covered under the consumer's auto policy.
  • Look for evidence of water damage. Check for:
    • Water stains, mold, mud or sand under carpets, seats, floor mats, inside roof cloth and dashboard.
    • Rusty metal inside the car, especially where you don’t expect to find it, such as in upper door hinges, trunk latches or the screws in the console.
    • Musty odors in the trunk and passenger compartment – these may be more noticeable when the heater or air conditioner is running.
    • Moisture inside interior and exterior lights, and excessive fogging and condensation on the windows.
    • Mud or grit in the spare tire compartment, under the hood and other out-of-the-way nooks and crannies.
    • Brittle wires under the dashboard or in the speakers and engine compartment.
    • Oxidation under the hood. Oxidation on metal may look like white powder or as tiny holes known as "pitting."
    • An engine that runs rough or hesitates.
  • Exposure to water affects more than a vehicle’s appearance. A car's electronic systems, including safety features like lights and airbag sensors, are extremely vulnerable to water damage.
  • Make your purchase fully informed. Your best protection is to have the vehicle thoroughly inspected by a reputable mechanic or auto repair shop before you buy.
  • Compare the price of the vehicle with similar makes and models. If the price you were quoted is extremely low or just too good to be true, be suspicious. Obtain a vehicle history to see what, if any, previous damage is on record. The following are a few sites that provide vehicle histories online. Check the site for the terms of use and any fees that may apply.

When an insured vehicle is flooded or damaged, the insurance company determines whether it is more economical to fix the vehicle or declare it a total loss. If the vehicle is declared a total loss, the insurance company will pay the vehicle owner a total loss claim and the vehicle is re-titled in the insurance company's name with a salvage title. Some states, such as Texas and Florida, also issue special "flood" titles for vehicles that have only been damaged by water but are not declared as total losses. But whether a vehicle has a salvage title or a flood title, any potential buyer should beware that the vehicle is considered to be severely distressed or damaged.

If a vehicle has an out-of-state salvage title, the out-of-state title will be converted to a Michigan salvage title. If an out-of-state title is a flood title, the new Michigan title will also be a flood title. Michigan salvage titles and flood titles are orange to alert potential purchasers of the vehicle’s history. A normal vehicle title is green.

A vehicle with a salvage title cannot be issued a license plate or used on public roads until it is inspected and recertified by a specially trained police officer and then retitled. The new title will show "rebuilt salvage" to indicate the vehicle had been previously designated as a salvage vehicle. A vehicle with a "rebuilt salvage" title can be registered for on-road use again, but it can never be issued a green title. A vehicle with a Michigan flood title does not need to be inspected and recertified by a specially trained police officer, but like a "rebuilt salvage" vehicle, a flood-damaged vehicle will never be issued a green title.