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National Insurance Crime Bureau Warns Consumers About Irene Flood Cars

Hurricane Irene, which hit the east coast in August 2011, subjected the New England and mid-Atlantic regions to highly abnormal levels of wind and flood damage. Most residents found themselves deficient or completely unprepared in terms of homeowners insurances and supplementary flood coverage. Now the National Insurance Crime Bureau is warning people living form Maine to North Carolina that the used car market in the area could face a different kind of flood — a glut of water-damaged vehicles being sold to unsuspecting buyers.

Massive Auto Claims after Hurricane Irene

The Bureau estimates that 11,789 auto insurance claims were processed after the storm for vehicles that sustained water damage during August, compared to just 992 such claims in August 2010. The greatest number of claims were filed in New Jersey (4,121) followed by New York with (2,809), and North Carolina with (2,585). Many of the cars were totaled due more to the age of the vehicle than to the degree of reparable damage. The ones that could be repaired are now showing up on used car lots or being placed for sale by private individuals.

The average buyer would not be able to spot a flood damaged vehicle by casual examination. Most consumers, faced with a really low price on what appears to be a high-quality used car, don’t see past that price tag. This is especially true with the current struggling economy in the United States, where unemployment remains high and people are trying to save as much money as possible. Fraudsters hawking flood cars without fully disclosing the vehicle’s history are even more likely to find a ripe crop of hard-pressed buyers.

Flood Cars Can Be Legally Sold

If the seller discloses that the car has been damaged in and repaired after a flood, there is no fraud. That’s important to remember. And many cars can be successfully rehabilitated and repaired from water damage. (If you’re looking at a car that you know has been in a flood, a trusted mechanic should carefully inspect and approve the vehicle before you proceed with purchase.)

The Importance of a VIN Check

The National Insurance Crime Bureau also offers a highly valuable protection to consumers at no charge. After Hurricane Katrina, the NICB created VINCheck(SM). Anyone can check a VIN (vehicle identification number) against claims processed by NICB-member insurance companies. There are literally millions of these claims, and the VIN check will reveal if the car was ever declared as a flood vehicle, a salvage car, or if it is a stolen vehicle.

The NICB represents a face of the insurance industry many consumers do not consider. Insurance fraud of all kinds is a major contributor to high auto, home, health, and even life insurance rates. If the insurer loses money via bogus claims, they have to recoup the loss by passing the expense on to consumers. The NICB exists to prevent, detect, and stop insurance fraud. This is not just for the benefit of the industry, but also to protect consumers.

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