KY law could yield influx of 'flood cars' for sale following hur - wave3.com-Louisville News, Weather & Sports

KY law could yield influx of 'flood cars' for sale following hurricanes

Many cars that sustained flood damage this year are likely to end up in Kentucky. (Source: NICB.org) Many cars that sustained flood damage this year are likely to end up in Kentucky. (Source: NICB.org)
About 700,000 vehicles are estimated to have been damaged by hurricanes Harvey and Irma this year. (Source: NICB.org) About 700,000 vehicles are estimated to have been damaged by hurricanes Harvey and Irma this year. (Source: NICB.org)
Watch WAVE 3 News on Wednesday at 11 p.m. for tips on how to avoid being scammed when you buy your next used car. (Source: NICB.org) Watch WAVE 3 News on Wednesday at 11 p.m. for tips on how to avoid being scammed when you buy your next used car. (Source: NICB.org)

LOUISVILLE, KY (WAVE) - Kentucky was never in the path of hurricanes Harvey or Irma. But months after the storms, the state will become a target.

Experts say the area will soon be flooded with water damaged cars, rusting from the inside out.

"It's really a buyer beware situation," Joe Hess, of the National Insurance Crime Bureau, told us. The national agency tries to battle insurance fraud.

We've heard of flood cars filtering their way back on the market from other storms before. But Kentucky may be predisposed to such fraud.

In fact, in 2016, Kentucky ranked 5th in the nation for having the highest number of reported flood cars, according to research by Carfax. Texas came in on top, followed by Louisiana, Pennsylvania and Florida.

>> Helpful Resources from the WAVE 3 News Troubleshooter

The reason, some experts point out, is the state's title laws. The Kentucky Transportation Cabinet's Department of Vehicle Regulation (DVR) is bracing for title requests for flooded vehicles being brought to the state to be "rebuilt." That process, they explained, usually involves only cleaning the inside and the outside of the vehicle, as well as changing the system fluids. The title would reflect the "rebuilt" term.

Once that is done, the "rebuilt" vehicle could be offered to a consumer with a cheaper price tag.

In other states flooded vehicles may receive a scrap title or junking certification, the DVR noted.

"There are unscrupulous dealerships out there that are going to make money off these cars," Hess said. "And they're not worried about you as a purchaser, they are worried about making money."

About 700,000 cars are estimated to have been damaged by flood waters during Hurricanes Harvey and Irma. According to Carfax, historically, about half the vehicles damaged by floods end up back on the market.

So here's how it works.

Once a vehicle has been in a flood, the insurance company sells it off in an auction. From there, cars are sold to dealers, making them available to the consumer. The majority of those vehicles, if written off as a total loss, get scraped for parts. In this case, the VIN number would reflect a history of flood damage.

But then there are the thousands of other flooded cars that did not have insurance. Those vehicles may never come up as having been a flood.

Kentucky does have a special designation on titles for flooded cars if they do not fit the "rebuilt" requirements. The title would classify the vehicle as a "salvage-water damage vehicle."

Some in the industry believe another problem is the lack of uniform title rules among states. Different states have different definitions and requirements to classify a vehicle as salvage or rebuilt. This lends itself to another scam called title-washing.

MORE FROM WAVE3.COM
Lawmaker, gun safety expert push to hold gun owners responsible for injuries to kids
Pass the Cash: Single mom surprised by friend
Deputies tase suspect in Louisville courtroom

In that scenario, an unscrupulous seller transfers the ownership from state to state until the vehicle gets a clean title, with no indication it was ever in a flood, or that it was a salvaged vehicle. Some states do not flag flood damage on titles.

"It's up to you as the purchaser to investigate that vehicle if you're interested," Hess warned. "Sandy vehicles are here, Katrina vehicles are here, it's probably just a matter of time before the market gets flooded with them."

According to Carfax, here's what consumers should look for:

  • A musty odor in the interior, which can sometimes be covered with a strong air-freshener
  • Upholstery or carpeting which is loose, new, stained or doesn't match
  • Damp carpets
  • Rust around doors, under the dashboard, on the pedals or inside the hood and trunk latches
  • Mud or silt in the glove compartment or under the seats
  • Brittle wires under the dashboard
  • Fog or moisture beads in the interior lights, exterior lights or instrument panel

Carfax also suggests car buyers:

  • Turn on the ignition and check that all instrument panel lights illuminate
  • Test the interior and exterior lights, air conditioning, windshield wipers, radio, turn signals and heater repeatedly
  • View the full CARFAX Vehicle History Report to check for reported flood damage or signs of salvage title fraud
  • Get the car checked thoroughly by a trusted mechanic 

Carfax is allowing consumers to check for flood damage for free by clicking here. Car owners can also see if their vehicles have ever been designated as "salvage" by clicking here.

Copyright 2017 WAVE 3 News. All rights reserved.

Powered by Frankly