US Senate Bill S.3707
Passenger Vehicle Loss Disclosure Act
Branson West, MO - Nov 17, 2006 - On July 20, 2006 Senator Trent Lott (R/MS) introduced Senate Bill S.3707 entitled the "Passenger Vehicle Loss Disclosure Act" designed to encourage insurers and self-insurers to disclose and make readily available information about any passenger vehicle that may have been declared to be a "Total Loss". This is a good and long-since needed piece of legislation. The Insurance Consumer Advocate Network applauds Sen. Lott for having brought this issue to the table. Senate Bill S.3707 can be viewed in its entirety by going to ... http://www.govtrack.us/congress/bill.xpd?bill=s109-3707Two Observations ... # 1 - "Liability Protection for Public Disclosure" - This section provides immunity protection from civil action as long as those required to comply with this new legislation make a "Good faith" attempt and have a "Reasonable belief" their efforts were in compliance. This wording seems to provide insurers (and self-insurers) with an easy-out Affirmative Defense to any attempted civil actions seeking "Money Damages" or "Equitable Relief". This protection is appropriate in the short-term as insurers become familiar with the reporting procedures. However, if in the long term, a pattern of failure to comply should become apparent as a Standard Business Practice, the effectiveness of this Affirmative Defense would become less-and-less reliable. All-in-all, this clause seems appropriate. # 2 - "Total Loss" - There exists an ambiguity of Definition inherent in its usage in this bill. To understand why this is of concern, we need to take an historical look at the standard business practices of insurers. DRP | Warranties ... The initials DRP generically translate to Direct Repair Programs. In short, this means insurers have entered into contractual agreements with select repair facilities whereby the shops have agreed to perform repairs in accordance with the dictates of the insurer. In exchange, the insurer "Refers" work to that shop. These DRP agreements give insurers absolute control over the repair process. When an insurer has Cost Containment as their primary objective, improper (sometimes dangerous) short-cuts become the order of the day. Repair Quality and Safety are given less-and-less consideration. As an incentive to encourage vehicle owners to take their damaged vehicles to DRP shops, the insurer will offer to "Guaranty the Repairs" for as long as the current owner owns the vehicle. On its face, this system sounds almost reasonable. However, there is a substantial body of evidence (growing exponentially) that demonstrates insurers are suborning (often requiring) their DRP "Partners" to employ sub-standard (and even dangerous) repair techniques. This writer, along with many of our affiliates, have inspected repaired vehicles that were so dangerous we would not release the subject vehicle back to the owner until we received a signature on a "Disclosure Statement" and a "Hold Harmless Agreement". When repair defects are brought to the attention of the controlling insurer, they often agree to "Total" the vehicle as of the date of loss. This is done under the repair warranty, Not under the terms of the insurance contract. In these instant situations, the word "Total" is a misnomer. "Total Loss" vs "Buy Back" ? ? ? In these "Total Loss" (actually "Buy Back") situations, the owner of the vehicle that had been abused receives equitable compensation. However, their vehicle had not actually been "Totaled" under a strict definition. Their vehicle would actually be the object of a "Buy Back". While the distinction between a "Total Loss' and a "Buy Back" may seem subtle to the casual observer, the distinction comes with Dramatic consequences. When the insurer does not officially declare the compromised vehicle a "Total Loss", they can skirt Title Branding Laws (including S.3707 should it become law in its present form). Here is what actually happens ... The controlling insurer will require their DRP "Partner" shop to "Buy Back" the compromised vehicle from the existing owner ... That owner will provide the shop with their "Clean" title ... The shop will then wholesale the vehicle through a local vehicle auction ... The compromised vehicle then goes back into the market place with a "Clean" title. Vehicle History Report Services are, to a large extent, dependent upon public information (police reports, inspection records, emission inspections, etc.) plus what little insurers may choose to provide. Therefore, insurers can, to some extent, control what appears on any independent Vehicle History Report. Fast Forward ... An unsuspecting Buyer in Due Course considers purchasing this compromised vehicle. The Seller provides a "Clear" vehicle history report and shows the "Clean" title that comes with the vehicle ... The sale is consumated. This new owner now drives a vehicle that may well be dangerously unsafe. While we have seen vehicles literally Snap-in-Half upon subsequent impacts, we've also seen vehicles lose their suspension components under normal operating conditions. However, Severe Structural Defects are not necessary to make repaired vehicles "Dangerous". Passive restraint systems (air bags) require precisely set sensors to deploy with Exact Timing. Any deviation from absolute factory specifications could easily alter deployment timing. People have been Killed by air bags that did not function properly. Improperly set sensors are not typically detected during normal service ... They only seem to become obvious when they have failed and severe injuries are a factor. A FAVOR ... Review Senate Bill S.3707 for yourself (note link above) and evaluate the observations we make here. If you feel our observations are credible, share this press release with those in your address book, AND make your feelings known to Your Senators, Your Congressman and Senator Trent Lott directly. You can identify their respective contact informations by going to ... http://www.govtrack.usNOTE: This Front Page has an "eMail this Press Release to a Friend" option for your convenience. Ask them to Amend Senate Bill S.3707 to define "Total Loss" as ... "Any Vehicle Whose Ownership Interests May Have Been Transferred as a Result of, Influenced by, or in Conjunction with a Vehicle Damage or Repair Warranty Claim" ... (or some inclusive form thereof). ________________________________________The Insurance Consumer Advocate Network is an InterNet based consumer advocacy effort designed to Increase Consumer Awareness as to Insurance Related Issues, Encourage Consumer Involvement with Insurance Related Efforts and Facilitate Consumer Contact with Pro-Consumer Entities.The InterNet web site for the Insurance Consumer Advocate Network is www.iCan2000.com |
