Images from the aftermath of Hurricane Sandy abound: Flooded cars sit abandoned at intersections with doors wide open. A fleet of taxi cabs rests underwater in Hoboken. At least 14,000 cars were damaged in New York area docks; most of these wheels will never roll.
Aftermath of Hurricane Sandy: Flooded cars in New York - Now its claim time.
As the water subsides, claims for flooded vehicles are leveling off. This weekend the Associated Press reported 31,000 claims for flooded or damaged vehicles by State Farm, Progressive, Nationwide and New Jersey Manufacturers. Reuters reported that GEICO had 20,000 car claims four days after the storm.
These figures are far short of the 325,000 vehicles known to have been flooded after Hurricane Katrina, according to the National Insurance Crime Bureau. That’s good news for consumers, in the area of Sandy’s landfall and beyond. The upcoming months will be test of post-Katrina reforms designed to stop unscrupulous dealers from selling flooded cars to unsuspecting drivers. Fortunately, drivers in New York and New Jersey are more likely to carry coverage to repair or replace cars lost to floods.
File Your Claim
Large insurers in New York and New Jersey are encouraging customers to file claims for flooded vehicles right away. Many, such as New Jersey Manufacturers, the state’s largest car insurer at 790,000 drivers, encourage policyholders to expedite claims by uploading photos of hurricane damage,
both to cars and homes.
In both New York and New Jersey, drivers historically carry insurance at levels well above the required minimums. While this causes both states to rank high in the National Association of Insurance Commissioners’ annual auto insurance premium survey, it also means those who lost a car in Hurricane Sandy are more likely to carry the comprehensive coverage needed for a replacement.
Do You Have Comprehensive?
Comprehensive coverage, which repairs cars or replaces them after mishaps other than a collision, will come through for drivers who purchased it before the storm. Anyone financing a car or driving a leased vehicle is probably required to carry comprehensive coverage, because it’s required to get a loan. Drivers facing challenges after Sandy will be those with older cars, who may have dropped or reduced coverage for comprehensive or collision once a car note was paid.
Drivers who lack enough coverage to replace a flooded car will be faced with a decision: Should they spend money for a new vehicle, or should they try to rehabilitate one from a flood?
Dangers After a Flood
While some cars can be rehabbed after being in a flood, it’s usually not the recommended course. Besides dangers of mold, damage
to a car’s electrical system typically causes insurers to declare a total loss. The process of drying out a car and replacing parts that will allow it to function is extensive, and in most cases a new vehicle makes sense over the long haul.
That doesn’t stop some dealers from trying to re-sell cars that have been in a flood. In the days after Hurricane Sandy, outlets such the National Automotive Dealers Association and Carfax warned of the potential of up to 250,000 flooded cars hitting the market.
Those fears have subsided along with the water. James Appleton, president of the New Jersey Coalition of Automotive Retailers, told the Associated Press this week that claims reports from his state were well below Katrina levels, in part because so many car owners in Sandy’s path evacuated before the storm hit.
Consumers will also benefit from changes since 2005 that
demand better reporting by auto insurers. Starting in 2009, the U.S Justice Department required the nation’s insurance companies to register cars that are total losses, within 30 days of that designation. The edict to register cars in the National Motor Vehicle Title Information System extends to salvage yards, car-rental companies and dealerships. Consumers can find reports on a used car at www.vehiclehistory.gov.
Image: Flickr.
