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Senate mulls total-loss disclosure legislation

November 18, 2010

Consumers would have greater access to passenger vehicle-loss data held by insurance companies, to protect themselves from buying flooded and salvaged vehicles, under Senate legislation introduced July 20.


The move under Senate Bill 3707 to make total-loss information commercially available is a new approach to the growing problem of salvage title fraud, which occurs because state motor vehicle titling laws are confusing and incomplete, and no central database exists to "red flag" all of the problem vehicles. 

Under the bill, insurance companies would have to make commercially available the VIN-based information they already collect: the date of the loss; the primary reason for total loss (i.e. damaged, flooded, stolen); and the odometer reading on the date of the loss.


None of the VIN-based data would include any personal identifiers protected by federal and state privacy laws. 

The legislation was introduced by Sen. Trent Lott (R-Miss.), who is chairman of the surface transportation subcommittee of the Senate Commerce Committee.


"This legislation is particularly needed in (Hurricane) 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," Lott said. 

About 5 million vehicles were "totaled" by insurance companies last year due to extensive damage, flooding or theft. Hurricane Katrina destroyed more than 500,000 vehicles, and history shows about half of them will be sold to unsuspecting consumers.


"This is a double-hit on consumers," said David Regan, the NADA’s vice president of legislative affairs. "It’s a public health risk because more unsafe cars are on the road, and it’s a pocketbook risk because people could overpay for a wreck that should be in the junkyard. 

"Dealers don’t want these wrecks on their lots any more than a mother would want to drive her children around in one."


In 2005, State Farm Insurance admitted to having resold 30,000 totaled vehicles over several years without salvage titles. In a 2001 Iowa case, Progressive Insurance acknowledged a similar practice on a smaller scale.