With flood-damaged vehicles offered for sale at too-good-to-be-true prices, the National Insurance Crime Bureau is maintaining a database of such items to prevent sales fraud.
Frank Scafidi, NICB public affairs director, said there are currently about 205,000 vehicle identification numbers listed in the database gathered from various sources at the sites of Hurricanes Katrina, Rita and Wilma.
While flood-damaged vehicles always have been a fraud concern for the insurance industry, Mr. Scafidi said the sheer magnitude of Katrina and the levees breaking in New Orleans have magnified the problem to an unprecedented level.
Any customer looking at a vehicle whose price seems inordinately below market should check the number with the NICB database. "It may look great at the time and even run fine for a test drive, but you will soon start having problems," he said.
The electronic functions will be the first to break down, he said.
Bringing along a trained mechanic would also be wise, Mr. Scafidi said, since the vehicle in question still might make a wise purchase if the extent of the damage and how much it would cost to repair it was known.
Regulators and insurance companies also have sent out alerts about the problem.
Charles Valinotti, assistant vice president for Sun Prairie, Wis.-based General Casualty Insurance Companies, said agents should ask their policyholders if they have purchased a vehicle with known hurricane damage. "The damage won't necessarily affect their policy, but it could affect the actual cash value of the vehicle. After discussing it, they may decide the vehicle requires less coverage."
Mr. Scafidi warned that policyholders may face difficulties recovering claim damages from a flood-damaged car.
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