Welcome to GulfCoastNews.com

Flooded, Wrecked Vehicles Pose Consumer Risks Unless Insurers Share Info

Hurricane Season Over, But Katrina Flooded Cars Still Threaten Public

From: Office of Sen. Trent Lott
12/07/06  GCN   Updated

Hundreds of thousands of automobiles and trucks that were flooded by Katrina are now flooding the county even though they were totaled by insurance companies and should not be on the market to sell. These vehicles are being cleaned up and resold without consumers knowing the history of these vehicles. Legislation requiring insurance companies to disclose the history of totaled cars is what is needed.

Senator Trent Lott and Representative Cliff Stearns have introduced legislation S 3707 and HR 6093 which would help combat the roughly five million vehicles “totaled” last year due to severe damage, flooding or theft, including 580,000 from the Gulf hurricanes alone. Thousands of these vehicles are cleaned up and resold with no history of the cars’ troubled pasts to unsuspecting customers – a problem called “title washing.”  News reports around the country have documented that Katrina cars are turning up as far away as Washington state. 

Lott is chairman of the Senate Surface Transportation and Merchant Marine Subcommittee of the Committee on Commerce, Science, and Transportation.

Stern is the chairman of the House Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection.

Lott  and Sterns were joined by Representative Charlie Melancon of Louisiana and representatives of the National Automobile Dealers Association (NADA) during their Thursday news conference.

The “Consumer Access to Total Loss Vehicle Data Act,” S. 3707, would make available to consumers information about automobiles declared a total loss by insurance companies. The legislation directs the National Highway Traffic Safety Administration to compel all insurers to commercially disclose information pertaining to total loss vehicles, perhaps through such online auto services as CAR-FAX.

“After Hurricane Katrina, I was approached by responsible auto dealers in Mississippi who were concerned abut flooded vehicles ending up in the marketplace,” Senator Lott said. “An estimated half million vehicles were damaged by Katrina, and indeed there is evidence that these cars are being cleaned up and sold to unsuspecting consumers.

“A number of these cars are unsafe and shouldn’t be on the roads. And folks are overpaying for vehicles they believe are mechanically sound. To the untrained eye, they appear to be in good shape.”

Senator Lott said that consumers should not have to rely on the various states’ titling processes because each state is different and, often, the branding information is not passed from one state to the next. When an insurance company declares a car totaled, the insurer assumes the title. “The insurance industry should make this information available to protect the consumers, and we will be working to enact that protection in the 110th Congress,” Senator Lott said. “Buyers are entitled to truthful titles and complete information about a vehicle’s history.”

Also joining the legislators at Thursday’s press conference were Don Regan with NADA and Scottie Davis, an auto recycler expert who demonstrated the problems with a car onsite that was flooded during recent Maryland storms but which appeared to the unwary eye to be a sound vehicle. Don Regan with NADA pledged his organization’s support in getting unsafe cars off the roads.

Lott says these vehicles represent a double hit on consumers.  First, it’s a significant economic risk to buyers of used vehicles who may overpay for a wreck   Second, it’s a significant and unnecessary public safety risk to the entire motoring public because more unsafe cars are on the road (i.e. airbags or anti-lock brakes fail).  This problem persists because state motor vehicle titling laws are confusing and incomplete, and no central database exists to “red flag” all the problem vehicles.  Buyers do not have enough timely access to title data at DMVs or total loss data at insurance companies.

Welcome to GulfCoastNews.com