Dealerships typically do not sell flooded cars directly to consumers. Instead, these water-damaged vehicles are usually sent to insurance auctions, where they are sold with a branded title (such as "Salvage" or "Flood") that permanently alerts future buyers to the damage. The primary goal for a dealership is to mitigate its financial loss after an insurance claim is processed.
The process begins once a car on the lot is damaged. The dealership's insurance company assesses the vehicle, and if the cost of repairs exceeds a certain percentage of the car's value (often around 75%), it is declared a total loss. The insurance company pays the dealership the car's pre-flood value, and the dealership transfers the title to the insurer. From there, the car is sold at a specialized salvage auction.
At these auctions, buyers are typically licensed rebuilders, parts suppliers, or exporters who understand the risks. The vehicles are sold as-is, and the title is branded to prevent someone from unknowingly purchasing a flood-damaged car. However, some unethical actors may buy these cars, perform superficial repairs, and attempt to title wash—moving the car to a state with laxer title laws to obscure its history—before selling it to an unsuspecting consumer.
The dangers of flood damage are severe and latent. Water can corrode electrical systems, airbag sensors, and brake components months after the event, leading to critical failures. Musty odors and mold are also common health hazards.
| Auction Category | Typical Condition | Potential Buyer | Estimated Price vs. Market Value |
|---|
| Run and Drive | Minor water exposure, operational. | Rebuilders, used car lots | 40-60% |
| Engine Start | Water in interior, starts but not drivable. | Parts dismantlers, rebuilders | 20-40% |
| No Start/Unstable | Significant water damage, mechanical issues. | Parts dismantlers | 10-25% |
| Parts Only | Severe damage, not operational, high parts value. | Parts dismantlers, scrap metal | 5-15% |
The best defense for a car buyer is a thorough inspection by a trusted mechanic and a history report from a service like Carfax or AutoCheck, which should reveal the title brand.
