January 27, 2013. Important caution on using VINCheck to determine if a vehicle has been a total loss Hurricane Sandy flood car. As noted by the National Insurance Crime Bureau (NICB) an insurance industry member supported group, only some insurers make their data available for VINCheck. Additionally, many Hurricane Sandy vehicles come from sources other than insurance total loss claims.
NSVRP has taken a random sample of 175 vehicles identified as flood damaged cars offered for sale at salvage auctions in the affected areas and which were acquired subsequent to Hurricane Sandy. Of these 175 units, only 20 have been identified by VINCheck as being total-loss salvage or flood loss vehicles. A number of these vehicles came from insurers listed as supplying information to the VINCheck database, yet after 60 days or more subsequent to Hurricane Sandy these still have not surfaced in VINCheck. NSVRP has identified over 100,000 vehicles which have been noted as having flood/water/salt water or storm total loss damage at the two major salave auction chains. We have also identified vehicles for which insurance total loss claims were paid and yet the vehicles have been offered for resale at auctions under original clean title paperwork. Additionally, we have identied more than 1,000 flood loss vehicles being auctioned off with clean titles both from insurance total loss pay-offs, rental car and self insured fleets as well as from private vehicles that appear to have been purchased for resale by commercial parties. (Also see the NSVRP submission to the FTC proposed Used Car rule).
Hurricane Sandy Advisory According to the National Insurance Crime Bureau there have already been some 250,000 flood related auto claims reported by insurance companies as a result of Hurricane Sandy. In addition to these insurance reported claims, there have been many thousands more in claims from both self-insured fleets as well as private parties who did not have insurance coverage for their vehicles.
In addition to these 250,000 insurance claims flood vehicles NSVRP estimates that there were in excess of 275,000 to 350,000+ additional flood loss vehicles that were not covered by insurance coverage also lost as a result of Hurricane Sandy bringing the total flood loss from Hurricane Sandy to between a total of 500,000 to 600,000+ flood loss vehicles. This is a direct result of a combination of self insured fleet and privately owned cars which did not have collision and comprehensive insurance would not have been subject to private insurer claims. The average age of a car on the road is now roughly 11 1/2 years and more than half of the vehicles in the affected areas would not have had commercial collision/comprehensive insurance coverage. Many of these vehicles have been crushed based upon age, however many have been offered for resale by their owners through eBay, Craigslist, or donated to charities under their original clean titles and without disclosure of their flood loss condition. Some have been transferred to secondary parties and resold through auctions or used car dealers with a history of any title branding or recording of a flood loss condition. In other cases we have noted flood vehicles offered for sale at auctions with clean titles with a notation on the auction site indicating the awareness of a water/flood condition, where the vehicles did not have proper title branding and which were not reported to databases as required and where the auction history was deleted from public access after the close of the sale making it difficult or impossible for the public to be aware of the flood loss status once the vehicle was to be resold to consumers by the buyers at the auction. (see our FTC used car rule submission for more information).
Updated 4-14-2013. NSVRP has already identified more than 100,000 water/flood total loss vehicles that have been listed for sale by the salvage auctions. Thousands have already been sold at auction since the the beginning of November. A number of these are being offered for sale under clean title paperwork - and in some cases apparently in violation of state branding requirements. Many have been moved to other states before being offered for sale. Once these vehicles have been sold at a first salvage auction, some are likely to be transferred by the first buyer to a different auction and then resold as clean title vehicles without any documentation or visible photographic indication that they were originally a flood total loss. (Examples of these kinds of auction transfer resales are included in the original NSVRP testimony provided to the Ohio Senate Transportation Committee by NSVRP attached to the Ohio Issues webpage.) NSVRP is urging states to immediately implement a ban on the sale of vehicles with clean out-of-state titles at their salvage auctions in order to block the ability of parties to bypass state title branding rules. This ban would make it more difficult for parties to transfer Hurricane Sandy flood vehicles to a second state under the pre-flood clean titles and bypass their obligations to get flood or salvage branding on the vehicles before they are resold.
NSVRP is monitoring much of the salvage activity related to Hurricane Sandy. Please check this page periodically as additional items are posted on this page related to Hurricane Sandy.
We would like to draw special interest to our downloadable investigator's affidavit interview form which can be used when interviewing a party who may have unknowingly purchased a rebuilt or used vehicle that may have been an undisclosed salvage or flood vehicle. It is available as a link on the left margin of this webpage.
We also urge all jurisdictions to strongly consider reviewing their statutes and regulations and recommend that if possible that jurisdictions try to implement the following best practices:
1) Make sure that there is an available title brand for flood and water damaged vehicles.
2) Make sure that your jurisdiction supports branding carry forward provisions to reduce the
opportunities for title washing between jurisdictions when vehicles are transferred between states.
3) Require mandatory non-repairable branding on vehicles that are flood vehicles and salt water
4) Require mandatory non-repairable branding on vehicles that have been damaged to 80% of ACV
or some other such threshold. (See the research on severely damage Ohio vehicles with repairable
salvage titles and massive damage. Ohio is a state that at present does not have mandatory
non-repairable branding damage thresholds.)
We are also finding a disturbing number of examples of flood damaged vehicles with clean titles showing up at salvage auctions. Be on the lookout for these situations. The major sources of these cases seem to involve one or more of the following:
1) Self insured fleet operators who provide flood vehicles to the salvage auctions under the original
clean title paperwork. While the auctions are listing on their websites that these are flood vehicles,
the actual titles are clean paper, and once the auction sales have taken place, the new buyer can
transfer and flip the paperwork in a second sale without their being a title history showing a flood
vehicle. These vehicles often do show up in NMVTIS as going through the salvage auction, but are
not being reported into NMVTIS in many cases by the self insured fleet operator who are also
required to report. Depending upon the jurisdiction this could also be a violation of state law.
2) Parties are also taking vehicles that are titled in the original state and are transferring them to
auctions in a second state without applying for new title paperwork. In these cases neither state is
aware that title branding and transfer rules are being bypassed. We suggest that states review
salvage auction records in cases when they see auction vehicles with flood notations being sold on
clean paperwork belonging to another jurisdiction. Depending upon the jurisdictions, this could also
be a violation of one or both jurisdiction's laws.
3) We are also seeing examples of claims paid off and where it appears that the vehicles may then be
offered for sale under the original insured title - often in a second state. These should be scrutinized
carefully for potential violations.
4) We are seeing clean title vehicles where the auction has noted on the listing that the vehicle is a flood
vehicle, and there is no identification as who is the owner of the vehicle. It appears that these include
private vehicles that did not have collision insurance, and which may have been purchased by the
salvage auctions under their current advertising programs to buy damaged and flood vehicles from
the public. NSVRP suggests you inspect these records to confirm that the title transferred and any
title branding has been done in the course of these purchases, and if the salvage auction is selling
the vehicles under the proper titles and branding.
In all cases you should be confirming that required transfers and branding are taking place. If the vehicles are 10 years old and newer, the failure to record the transfer information may be a violation of the Federal Odometer Act, and may have additional non-obvious consequences. Violations of the Odometer Act may include the potential for civil and criminal penalties.
Also be aware that virtually all these transactions are subject NMVTIS reporting requirements. Violations of NMVTIS reporting are subject to civil penalties of up to $1,000 per vehicle violation by each obligated non-reporting party.
Content copyright . NSVRP.ORG. All rights reserved.