Over 637,000 Vehicles Damaged in Hurricanes Harvey and Irma

Flooded vehicles have finally stopped arriving at the Royal Purple Raceway east of Houston. Some 23,000 now await processing and retitling to be auctioned off for parts or to be scrapped. That is just one of several insurance industry salvage locations where more than 422,000 insured vehicles damaged by Harvey have been taken for processing. According to the National Insurance Crime Bureau (NICB), these totals surpass the number of claims that resulted from Hurricane Katrina (approx. 300,000) and from Superstorm Sandy (250,500).

In addition, more than 215,000 claims have been filed following damage to vehicles from Hurricane Irma in Florida.

These insured vehicles will be processed and rebranded with a salvage title and sold at online auctions to dismantlers who will save usable parts or have the vehicle crushed and sold for scrap.

The VIN numbers are entered into the NICB’s VINCheck database, which is free to the public and will indicate the vehicle has been damaged and branded. They are also entered into the National Motor Vehicle Title Information System (NMVTIS).

Unfortunately, owners of even more vehicles no longer carry comprehensive coverage that covers flood damage and those vehicles are not part of the system. The owner should request a new branded title but that may not happen. In fact, many flooded vehicles that weren’t insured will be cleaned up and sold with no indication of any damage.

Some unscrupulous buyers will also buy a branded vehicles, clean it up, and take it to another state where they will obtain a “clean” title and sell it with no warning that it has been flooded.

Anyone looking to buy a vehicle in the weeks and months ahead should be on the lookout for hidden flood damage. Here are some tips.

  1. Check vehicle carpeting for water damage
  2. Check for rust on screws or other metallic items
  3. Inspect upholstery and seat belts for water stains
  4. Remove spare tire and inspect area for water damage
  5. Check the engine compartment for mud or indicators of submergence
  6. Check under the dashboard for mud or moisture
  7. Inspect headlights and taillights for signs of water
  8. Check the operation of electrical components
  9. Check for mold or a musty odor

A sea of flooded vehicles pack a raceway outside of Houston, Texas.

Beware Harvey Flood-Damaged Vehicles

Flooded cars near the Addicks Reservoir in Houston, TX. (David J. Phillip, File/Associated Press)

The National Insurance Crime Bureau (NICB) is warning the nation’s consumers that vehicles flooded by Hurricane Harvey may soon be appearing for sale around the nation.

After a disaster, NICB works with its member companies, law enforcement and auto auction companies to identify the vehicles that have had an insurance claim filed and to process them for sale. All of the cars, deemed to be a total loss, will be retitled with the Department of Motor Vehicles and the new title will indicate the fact that the vehicle has been flood damaged. Most of the vehicles are sold to parts’ companies who will dismantle them and re-sell usable parts that were not damaged by the flooding.

The Vehicle Identification Number (VIN) is also entered into the NICB’s VINCheck® and the National Motor Vehicle Title Information System (NMVTIS) database.

NICB’s VINCheck allows car buyers to see whether a vehicle has ever been declared as “salvage” or a total loss by an NICB member that participates in the program. Insurers representing about 88 percent of the personal auto insurance market provide their salvage data to the program. It also alerts users if a vehicle has been stolen and is still unrecovered. VINCheck is a free public service available at: www.nicb.org/vincheck.

Keeping damaged cars out of the hands of unsuspecting buyers is a major focus of the industry. Unfortunately, some of the flooded vehicles may be purchased at bargain prices, cleaned up, and then taken out of state where the VIN is switched and the car is retitled with no indication it has been damaged.

NICB warns that buyers be particularly careful in the coming weeks and months as thousands of Harvey-damaged vehicles may reappear for sale in their areas. Vehicles that were not insured may be cleaned up and put up for sale by the owner or an unscrupulous dealer with no disclosure of the flood damage.

Buyers should have a vehicle checked by a reputable mechanic or repair facility before handing over any cash.

Consumer Resources

100,000+ Insured Vehicles Soaked in Louisiana

The August downpours that dumped more than 30 inches of rain in two days on parts of Louisiana have left as many as 100,000 cars and trucks damaged – and that’s only counting insured vehicles.

The National Insurance Crime Bureau (NICB), says claims reporting and vehicle recovery efforts that were initially slowed by the large scale flooding are now in full swing and, according to the state’s Division of Motor Vehicles, the numbers are much higher than originally expected.

Based on the extensive vehicle losses following Hurricane Katrina in 2005, Louisiana enacted strong measures to help protect unsuspecting consumers from buying a flood-damaged vehicle. Once an insured vehicle has been determined by the insurer to have been flood damaged it is towed to one of the auction facilities and processed with a new title that indicates it has been water damaged. In Louisiana, during an emergency like the recent flooding, the severity of flood water damage may require a Certificate of Destruction. In that case, the vehicle has to be crushed, or sold to a company that will dismantle it for parts and destroy what remains. The vehicle identification number (VIN) is entered into the state’s records, NICB’s VINCheckSM, and the National Motor Vehicle Title Identification System (NMVTIS) so that the consumers can check a vehicle history before purchasing a used car or truck.

Flooded vehicles that did not have insurance coverage are a major concern as they are frequently cleaned up to hide the damage and then sold to unsuspecting consumers with no indication of a problem. The number of uninsured vehicles that were flood damaged may be even more than the number of insured vehicles since many owners choose to drop their policy’s comprehensive coverage as the vehicle ages.

“It’s buyer beware,” said Commissioner of Motor Vehicles Karen St. Germaine, who warns those in the market for a used car both in state and across the country to do their homework before putting any money on the line.

Tips

  • Look for water stains, mildew, sand or silt under the carpet, floor mats, and dashboard, and in the wheel well where the spare is stored. Look for fogging inside the headlights and taillights.
  • Do a smell test. A heavy aroma of cleaners and disinfectants is a sign that someone’s trying to mask a mold or odor problem.
  • Get a vehicle history report. Check a trusted database service. You can check NICB’s free VINCheck database and the Louisiana Office of Motor Vehicle’s site. There are also reliable services that charge a small fee for history reports.
  • Have a trusted mechanic inspect the car’s mechanical and electrical components, and systems that contain fluids, for water contamination.

For more tips click here.

NICB and state officials, including the Louisiana State Police, work closely to pursue possible insurance fraud and vehicle theft. If you suspect fraud, call the NICB Hotline at 800-TEL-NICB (800-835-6422).

Hurricane Katrina: A 10-Year Retrospective

Katrina10YearsBeginning today—and every day this week—the National Insurance Crime Bureau (NICB) will release segments of a five-part documentary video that provides first-hand recollections of NICB employees and law enforcement personnel as they reflect on their roles in the aftermath of Hurricane Katrina.

Video release schedule:

Monday, Part 1: Multistate Devastation

Tuesday, Part 2: NICB’s Initial Response

Wednesday, Part 3: Vehicle Identification

Thursday, Part 4: Coast to Coast Impact

Friday, Part 5: Birth of VINCheck

Widespread destruction, NICB responds

While Katrina impacted parts of Alabama, Florida and Mississippi, its most widespread destruction occurred in Louisiana in and around New Orleans. After making landfall on August 29, 2005, Katrina’s heavy rainfall and significant storm surge caused breaches in a number of the levees protecting New Orleans from Lake Pontchartrain. As a result of those levee failures, roughly 80 percent of New Orleans was underwater by August 31.

In terms of property damage, Hurricane Katrina was the most costly on record with insured losses estimated at over $41 billion*. Part of that figure came from insurance claims on more than 300,000 vehicles damaged or destroyed by Katrina—vehicles that presented an attractive opportunity for fraud.

KatrinaFloodedVehiclesRecognizing the unprecedented number of vehicles that were flooded or otherwise damaged from Katrina, NICB dispatched teams to the region and established the Gulf Coast Task Force (GCTF) which operated from two locations: Baton Rouge, La. and Mobile, Ala. Over the next several months, NICB personnel from all over the United States were rotated through the GCTF where they worked side-by-side with state and local law enforcement officers in identifying and cataloging the thousands of damaged vehicles that littered every part of New Orleans and Mobile—and most points in between—in Nature’s random display of destruction.

As the vehicle inventory process took shape, GCTF personnel had some time to pursue allegations of insurance fraud which NICB was receiving on its hotline almost from the moment Katrina made landfall. Even as search and recovery efforts were underway, some saw opportunity to exploit tragedy for personal and illicit gain. NICB investigated everything from bogus claims for flooded vehicles that were nowhere near the storm area to yachts being scuttled by their owners, but blamed on Katrina so they could collect an insurance payoff.

The birth of VINCheck

VINCheckTo prevent unsafe flood vehicles from entering the commerce stream disguised as legitimate used vehicles, NICB created the “Katrina Flood Vehicle Database.” This database was populated with the vehicle identification numbers (VINs) of every Katrina-damaged vehicle that was insured by one of NICB’s 1,100 member insurance companies. Although initially developed to more efficiently share data with law enforcement, state fraud bureaus, motor vehicle departments and insurance companies, NICB realized that allowing consumers to have free access to this data was the best way to help them protect themselves from making an expense—and potentially life-threatening—flood vehicle purchase.

Within two months of Katrina’s landfall, The Katrina Flood Vehicle Database was opened to the public. As this free consumer protection grew in popularity and usage, its name evolved into VINCheck. With the new name and with the cooperation of participating insurance companies, VINCheck not only identified flood vehicles, but any vehicle that had been declared a total loss, salvage, or was an unrecovered stolen vehicle.

Since its creation, VINCheck has been the most visited page on the NICB.org website. From January 1, 2009, through December 31, 2014, more than 5 million VINs have been searched through VINCheck. From those queries, 48,442 theft records and 507,110 salvage records were identified meaning that VINCheck may have saved thousands of innocent consumers from experiencing significant financial losses—or worse.

The hurricanes of 2005, of which Katrina was the Queen of Destruction, challenged all levels of government as well as state and local law enforcement, the insurance industry and disaster relief agencies. The lessons learned from Katrina helped government and non-government officials deal with another mega storm when 2012’s Sandy devastated the Eastern Seaboard and other inland areas.

While natural disasters are an unfortunate reality of life we can understand them. To some extent, we can prepare for them and mitigate their damage. But when ill-intentioned people use these events to commit fraud against a population already reeling from a disaster, they will eventually attract law enforcement’s attention with NICB agents at their side.

As we did after Hurricanes Katrina, Rita, Wilma, Ike, and Sandy, NICB’s nationwide distribution of investigative and analytical resources are poised to deter, detect and defeat acts insurance fraud that would cause further harm to the legitimate victims of catastrophes.

*The Insurance Fact Book, 2015, p. 148, Insurance Information Institute, New York.

Texas Flooding Damages Up to 10,000 Insured Vehicles

DES PLAINES, Ill. – The recent flooding in Texas means the end of the road for an estimated 7,000 to 10,000 insured vehicles that suffered water damage.

Salvagelot

Copart facility in Houston, TX

That’s the current estimate from Copart, a company that works on behalf of insurers to handle the vehicles damaged in catastrophes. About 2,500 cars, trucks, motorcycles, RVs and other vehicles have already been towed to one of Copart’s locations, a 200-acre processing facility in Houston.

After a disaster, the National Insurance Crime Bureau (NICB) works with its member companies, law enforcement and companies like Copart to identify the vehicles that have had an insurance claim filed and to process them for sale. All of the cars will be retitled with the Department of Motor Vehicles and the new title will indicate the fact that the vehicle has been flood damaged. Most of the vehicles are sold to parts companies who will dismantle them and re-sell usable parts that were not damaged by the flooding.

To see a video about the processing of flooded vehicles, click here.

The Vehicle Identification Number (VIN) is also entered into the NICB’s VINCheck℠ and the National Motor Vehicle Title Information System (NMVTIS) database.

Interior

Interior of a flooded Porsche

NICB’s VINCheck allows car buyers to see whether a vehicle has ever been declared as “salvage” or a total loss by an NICB member that participates in the program. Insurers representing about 88 percent of the personal auto insurance market provide their salvage data to the program. It also alerts users if a vehicle has been stolen and is still unrecovered. VINCheck is a free public service available here.

Keeping damaged cars out of the hands of unsuspecting buyers is a major focus of the industry. Unfortunately, some of the flooded vehicles may be purchased at bargain prices, cleaned up, and then taken out of state where the VIN is switched and the car is retitled with no indication it has been damaged.

NICB warns that buyers be particularly careful in the weeks and months after a major catastrophe. Vehicles that were not insured may be cleaned up and put up for sale by the owner or an unscrupulous dealer with no disclosure of the flood damage.

Buyers should have a vehicle checked by a reputable mechanic or repair facility before handing over any cash.

Consumer Resources

* For a free brochure with tips to avoid post-disaster fraud, click here.

* For useful checklists, including how to spot flood and salvage vehicle scams and post-disaster contractor repair schemes, click here.

* For free consumer access to the vehicle salvage records of participating NICB member insurance companies who collectively provide 88 percent of the auto insurance in force today, access NICB’s VINCheck℠.

Insurance Fraud Headlines for May 15, 2015

Here are the top insurance fraud stories for today:

* Mount Carmel man charged with vehicle insurance fraud (Insurance News)

* Two ambulance firms to pay $600,000 in insurance fraud settlement (Connecticut Post)

*Fraud Fraud: What it’s costing you, how to protect yourself (WABC-TV)

* Thieves eyeing Houston-area truck drivers’ tailgates (KTRK-TV)

* How to buy insurance for a salvage title car (CarInsurance.com)