The historic floods that battered Louisiana last month damaged an estimated 100,000 insured vehicles.
The National Insurance Crime Bureau said the number of uninsured vehicles damaged by flooding may be even more than those that are insured because owners may have chosen to drop coverage of aging vehicles.
The flooding also hit new-car dealerships hard. It initially closed or disrupted 60 to 80 dealerships, with a handful of dealerships losing their entire inventory of new and used vehicles.
The National Insurance Crime Bureau said that claims reports and vehicle recovery efforts were initially slowed by the flooding but are now in full swing and the numbers are much higher than originally expected.
Rivers in Louisiana crested at record levels in multiple places after storms dumped more than two feet of rain in three days in some places in mid-August. The Amite River, for example, reached 46.2 feet in Denham Springs, five feet higher than a 1983 record.
Following Hurricane Katrina in 2005, Louisiana rolled out measures to protect consumers from purchasing flood-damaged vehicles, the bureau added.
Once an insured vehicle has been determined by insurers to be flood damaged, the bureau said, it is towed to an auction and processed with a new title, indicating that it has been water damaged.
The severity of flood water damage may require a “Certificate of Destruction” in which the vehicle has to be crushed or sold to a company that will dismantle the vehicle for parts and destroy what remains.
About half of all vehicles damaged by flooding eventually return to market, according to Carfax.
At least 1,500 families with household members working at dealerships were among the 100,000-plus families across the Baton Rouge area impacted by the floods. The Baton Rouge and Lafayette areas were among the hardest hit.
The National Automobile Dealers Charitable Foundation Emergency Relief Fund is distributing checks of up to $1,500 directly to affected employees. And the National Automobile Dealers Association aims to raise $2 million more from members for the fund. It is likely to be the second-biggest disaster relief effort staged by the fund after Hurricane Katrina.
Reuters contributed to this report.