We realize that Northern Michigan isn’t home to many floods or hurricanes, but we find when major storms occur like Hurricane Harvey, Michiganders end up with vehicles that come from devastated areas.
Unlike home insurance; where flood is excluded, auto insurance policies do provide coverage for flood if comprehensive is purchased. When vehicles are in a flood, and are totaled by an insurance company, the owner has the option to purchase the vehicle back from the insurance company. When that happens, the vehicle is then issued a ’salvage’ title.
What does that mean? It means that the insurance company has the vehicle re-titled due to legal liability issues that could arise if someone purchases it and incurs injury or loss due to the vehicle’s salvaged condition.
It doesn’t just happen with storm damage. My son recently hit ice with his vehicle and when he ditched it and hit a huge snowbank, the underside of the vehicle slammed into the block of snow/ice so hard that it bent the vehicle’s frame. After 3 body shops, we were told it could not be repaired and then be deemed ‘safe’ for others to drive. It was therefore totaled and we were paid the fair current market value of the vehicle to then go and purchase another. (That hopefully he will have for a few years before hitting anything). Yes, I’m an optimistic mom!
When major storms hit like they did in Texas, we often get calls from clients who have purchased vehicles for a ‘really good deal’. As with all sales, Buyer Beware is our warning.
We would advise you, when buying used vehicles, especially online, that you ask about their title and if they were in a major loss. If they have a salvage title, regardless if it’s due to a flood or a collision, the insurance will not only usually cost you more, but many insurance companies will also value the vehicle lower than one that has a standard issued title. Some set the limit at 80% of fair market value at the time of loss, but as with all coverages and limits, each company can be different in their valuation, so you need to consult with your agent if you are looking to purchase any vehicles that have a salvage title or extensive prior damage.
As always, if you don’t have an agent that is assisting you with your insurance buying decisions, we are simply a phone call, email, or agency visit away.