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Consumers should tread lightly and be cautious when deciding to purchase a brand-new car with hail damage from a dealership. One consequence of living in Nebraska is the sometimes violent and dangerous thunderstorms beginning in the Spring and extending through the Fall. Brand-new vehicles for sale on a car dealer’s lot oftentimes do not stand a chance against hail, and frequently these new vehicles sustain hail damage. Of course, this is nothing new to the many car dealerships that call Nebraska home. Depending on the extent of the hail damage, many dealerships offer these new vehicles at a discounted rate to their consumers. They promote the sale on their website and through television, radio and newspaper advertising with big savings on brand new vehicles.
For example, if you go to the website of Baxter Subaru in Omaha, you will see under their specials page, “Hail Sale Savings at Baxter Subaru.” The advertisement goes on to state, “these small dents could equal huge savings for you” and “Stop by Baxter Subaru to shop limited-time offers during our Hail Sale.” Baxter is certainly not the only dealership in Nebraska offering to sell hail-damaged vehicles at a discount. The Woodhouse Auto Family, with its largest dealerships located in Blair, also has locations in other parts of the State and in Iowa. In July 2014, a monstrous thunderstorm hit Blair, Nebraska devastating the nearly 4,400 brand-new vehicles for sale on Woodhouse’s lots. After the July 2014 storm, the co-owner of Woodhouse in Blair was quoted in Automotive News saying, “We seem to go through a version of this every few years.” See https://www.autonews.com/article/20140604/RETAIL07/140609919/hail-ravages-thousands-of-vehicles-at-nebraska-iowa-dealerships. As a result, Woodhouse held a “Hail Sale,” to try to recover its losses.
The allure of a consumer wanting to purchase a brand-new vehicle at a discounted rate is not surprising. In a sense a consumer gets more “bang” for his or her buck. But there are certain pitfalls consumers interested in purchasing a hail damage vehicle should avoid. While a brand-new vehicle with minor hail damage is not considered a salvaged vehicle in Nebraska, an insurance company may not offer coverage for these vehicles. It may depend on the degree of damage, but insurance companies generally will not insure a new hail damaged vehicle because of the risk of loss. However, some insurance companies may ensure the vehicle after the hail damage is repaired. Unfortunately, the cost to repair the hail damage might exceed the benefit of purchasing a hail damaged car in the first place.
Because of this, prospective purchasers of a new hail-damaged vehicle should always check with their auto insurer about coverage BEFORE entering into a contract for purchase. If purchasers wait until after the sale is finalized, he or she could be stuck with an uninsurable car and remain on the hook for making car payments. Without proof of insurance, the car that you purchased to get you to work, school, and other destinations should not be driven. Nebraska requires all motor vehicles to have basic automobile liability coverage and to carry proof of insurance. Failure to do so could result in a Class IV misdemeanor under Nebraska law. See Neb. Rev. Stat. Ann. § 60-3,168.
In addition, consumers that do not read the fine print could purchase a brand-new vehicle, “AS IS.” By purchasing the vehicle “AS-IS,” a consumer does not get the benefit of the factory warranty that comes with the purchase of a new vehicle. Thus, if a new car requires repairs for something that would ordinarily be covered under the warranty, the consumer will have to pay those costs out-of-pocket. A consumer should always weigh the pros and cons when purchasing a new hail damaged vehicle. The deal could be too good to be true.