The Car and Truck Fleet and Leasing Management Magazine

New Legislation Calls for Disclosure of Dangerous Flooded and Wrecked Vehicles

August 15, 2006

WASHINGTON, D.C. – Efforts by the National Automobile Dealers Association (NADA) to make America’s roadways safer by protecting consumers from purchasing flood and salvage vehicles took a step forward when a senior lawmaker introduced legislation (S. 3707), which would require insurance companies to make total-loss information commercially available to the public.Approximately 5 million vehicles were totaled by insurance companies last year due to extensive damage, flooding, or theft. But thousands of these totaled vehicles are rebuilt and then sold, with clear titles, to unsuspecting customers. This problem grew dramatically worse with the estimated 500,000 vehicles damaged by Hurricane Katrina. There is evidence that many of these flood-damaged vehicles are now returning to the marketplace. The bill’s sponsor, Mississippi Senator Trent Lott, chairman of the Surface Transportation Subcommittee of the Senate Commerce Committee, noted in his weekly column that his legislation “will make available to consumers information about automobiles declared a ‘total loss’ by insurance companies. This legislation is particularly needed in Katrina’s wake, but it’s hardly a new problem. Even without the influx of Katrina-damaged cars, thousands of wrecked, flooded, or stolen automobiles are sold every year with clean titles to unsuspecting consumers.”The NADA-supported approach uses existing technology to focus on Vehicle Identification Numbers (VINs) of totaled vehicles. This approach is preferable to enacting a uniform national salvage title. The solution requires auto insurance companies to make commercially available the following VIN-based information they already collect: date of total loss, primary reason for total loss (i.e., damaged, flooded, stolen), and the odometer reading on the date of total loss. None of this VIN-based data would include any personal identifiers protected by federal and state privacy laws.Despite repeated attempts to curb salvage title fraud, this problem persists because state motor vehicle titling laws are confusing and incomplete. No public database exists to ‘red flag’ all of the problem vehicles. Buyers do not have enough timely access to title data at DMVs or total-loss data at insurance companies.
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