Many Damaged Vehicles Are Sold With Clean Bill of Health

More than 1 million vehicles throughout the U.S. were damaged by accidents or the likes of hail, tornadoes, flooding and thunderstorms during the first half of this year.

According to data from Experian Automotive's AutoCheck system, more than 185,000 of these vehicles lost their damage designation when their titles were “washed,” a practice used by unscrupulous sellers.

When vehicles sustain damage or experience other major events in their history, they carry “brands” on their titles.

The brands are usually words or symbols on the official vehicle title issued by the Department of Motor Vehicles.

These brands signify vehicle status or condition. Classifications include salvaged, lemon, rebuilt, reconstructed, water, hail, fire damaged, insurance loss, broken odometer and abandoned.

More than 15% of damaged vehicles in the first six months of this year lost their damage designation when they were re-titled in another state, AutoCheck's data shows.

Title-washing is a term used when vehicles are re-titled in other states than where damage was done, and the ‘brand’ is not carried over to the new title.

“Too often, vehicles branded due to some form of severe damage are reconstructed and re-titled without their damage-related brand and then sold to unsuspecting consumers,” says Scott Waldron, president of Experian Automotive.

Experian says its National Vehicle Database houses more than 500 million vehicles.

Meanwhile, the National Automobile Dealers Assn., fighting for total-loss vehicle disclosure, applaud the efforts of the National Insurance Crime Bureau (NICB) for creating a new Web-based service with total-loss data for consumers.

“This is a step in the right direction, but because the information is limited, we still need federal legislation that would expand total-loss disclosure,” says Ivette Rivera, NADA's executive director of legislative affairs.

“We would like all insurers and rental car companies to leverage existing technology, such as vehicle history reports, to keep dangerous, rebuilt cars and trucks off the road to truly protect consumers,” Rivera said.

The NICB's VINCheck (http://www.nicb.org/) allows consumers to check five vehicles per day for reports of severe damage, flood or theft. The Web site includes mostly insured vehicles, but lacks access to the records of self-insured vehicles, rental fleets and insurers who are not NICB members.

This information, available to consumers via a limited Web-database, gives consumers the ability to check whether a vehicle has been severely wrecked, flooded or stolen.

NADA seeks further transparency by urging insurers to make this same total-loss information commercially accessible to vehicle history providers so dealers, vehicle wholesalers, auctioneers, and remarketers of used cars can provide another layer of protection for consumers.

“With hundreds of cars underwater throughout the Midwest, used-car buyers need every tool available to ensure that they do not unknowingly end up with one of these refurbished flood cars,” Rivera says.

With millions of used vehicles bought and sold at wholesale auctions every year, more timely and commercially available total-loss data would provide a powerful tool for the wholesale market to identify and track totaled vehicles.

Since the Gulf Coast hurricanes of 2005, NADA has been advocating for federal legislation that would require insurance companies to disclose the VINs of totaled vehicles on a more complete and timely basis and “red flag” potentially unsafe cars and trucks.