Bought a used car from a dealer - mechanic says it has flood damage that wasn't disclosed. What are my options?

So basically former insurance auto adjuster here with 15 years experience. I want to add something important for anyone reading this thread going forward: pre-purchase inspections should be considered mandatory for any used car purchase, not optional. The 150 to 200 dollars you spend on an independent inspection is the best money you will ever spend on a vehicle purchase.

Beyond the flood damage signs already mentioned, there are several other red flags that trained inspectors look for. Mismatched paint or overspray on body panels can indicate prior accident damage. Fresh undercoating applied to the undercarriage is sometimes used to hide rust or flood evidence. New carpeting or upholstery in a car that otherwise shows its age is suspicious. And always check the spare tire well, since that is the lowest point in the vehicle and the hardest place to clean flood residue.

I also want to point out that this problem is getting worse, not better. Hurricane Helene in 2024 and subsequent storms have flooded hundreds of thousands of vehicles that are now making their way through the title washing pipeline. The National Insurance Crime Bureau estimated that over 300,000 flood vehicles from recent storms will end up being resold to unsuspecting buyers over the next two to three years. If you are buying a used car in 2025 or 2026, you should be especially vigilant.

One more tool the original poster did not mention: the AutoCheck vehicle history report sometimes catches flood records that Carfax misses, and vice versa. Running both reports costs maybe 50 dollars total and gives you much better coverage than relying on just one database. Between AutoCheck, Carfax, NMVTIS, and NICB VinCheck, you can build a fairly complete picture of a vehicle history before committing to purchase.