Rhode Island Reforms Total Loss Criteria for Insurers
Rhode Island Gov. Lincoln D. Chaffee on July 17 signed into law state legislation requiring insurance companies to get the vehicle owner’s written consent before they can declare a vehicle a total loss, as long as the cost to repair is less than 75% of the vehicle’s pre-collision fair market value.
In contrast, most states address the issue of total loss by defining damage thresholds in order to spell out requirements for salvage title laws. In other words, they require insurance companies to declare a vehicle a total loss when the damage is above a certain threshold. But when damage is below that threshold, insurers have broad discretion on whether to declare the vehicle a total loss.
The legislation drew support from the collision repair industry. However, the insurance industry strongly lobbied against it. The change in law is in the form of a revision of the Rhode Island General Laws.