Buyers warned they must flush out flood-damaged cars

Car buyers have been warned to be on the lookout for flood- damaged vehicles from Queensland and Victoria. Thousands of them have been salvaged from the disaster-affected areas for resale.

The Insurance Council of Australia has received more than 10,000 claims for damaged vehicles and has cost them about $296 million.

While most vehicles have been deemed statutory write-offs and cannot be repaired legally, that has not stopped them going under the hammer at auctions.

Pickles Auctions has already held two large sales of flood-damaged cars in Brisbane and Melbourne. Angela Conn, a spokeswoman for Pickles, said most vehicles sold at the Brisbane auctions were statutory write-offs and the buyers were informed.

But extensively damaged cars from the flood and cyclone areas are still expected to slip through loopholes in the system. Cars deemed repairable write-offs by insurers can be repaired and sold legally, even if they have been damaged or flooded.

Though the cars are being sold in Queensland and Victoria, experts say they will quickly be moved to other states on the used market. Buyers are being warned to pay close attention for signs of flood damage in used cars.


Reference: Stephen Ottley. Drive.com.au, March 11, 2011


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Flood Damaged Car Sales Warning

In the wake of floods and storms in Queensland and NSW this year, buyers have been warned that some cars may be sold without their damage history being declared.

Buyers can be caught out not realising that most vehicles deemed statutory write-offs cannot be repaired legally and warranties are instantly void.

But that doesn't stop some independent sellers trying to rip off unsuspecting buyers. There are likely to be thousands hitting the market in the next few months at a lot of auctions for flood-damaged cars.

In 2011, after the Queensland floods and cyclones there was a 20 per cent increase in written-off and flood-damaged vehicles.
Insurance companies did not have official figures of flood-damaged vehicle claims but say that with widespread flooding across most eastern states it could be thousands.

The Motor Trades Association of Australia (MTAA)  has also warned that many of these vehicles could be cleaned and repaired and put back on the market without buyers being made aware. However, the problem would be solved if all states and territories could agree on a single definition for a flood-damaged vehicle.

The new Personal Property Securities Register (PPSR) includes a variety of car history information such as whether it is lost, stolen, encumbered or a damaged write-off. Buyers should always do a PPSR vehicle check online and/or have a vehicle inspection to verify the overall condition of the car. Today, motorists must supply the vehicle identification number (VIN) or chassis number when selling their car.

At this early stage, there is a problem due to inconsistencies in the information available. NSW has the toughest restrictions on write-offs preventing them being registered anywhere in Australia, but there are ways to get around those restrictions.

You can't register a written-off vehicle unless you are licensed to repair them and it is repaired to a certain standard. Also, if you have owned it longer than five years you can repair it. If you really want to get them back on the road, there is always a way. Private owners without comprehensive insurance could clean up a submerged car and sell it without the vehicle ever being declared flood damaged.

If it's written off by the insurance company it falls into the range of notifiable vehicles, but if it's older than 15 years or a private vehicle not fully insured, owners are able to clean them up and sell them. In many cases the salvageable cars are simply washed and offered for sale as they stand and can range from driveable to barely recognisable.

While reputable dealers advertise cars as flood damaged, others may be offered for sale without buyers being told of the damage. As the market fills with more flood damaged vehicles and with many ways the seller can conceal the history, it's absolutely necessary for buyers to know what to look for when checking for water damage.

Cars are often sold in locations far from their origin, so buyers across all states and territories need to be aware of this issue. Flood-damaged vehicles sold at auction may not carry manufacturer warranties, or may only have conditional manufacturer warranties.


Reference:  Mark Hinchliffe. Carsguide.com.au, March 26, 2012