WASHINGTON, D.C. – The National Automobile Dealers Association (NADA) has called on the Senate to bring more transparency to the used-car-buying process by requiring insurance companies to provide consumers access to data on severely damaged, stolen, and flooded vehicles. David Regan, VP of Legislative Affairs for NADA, who testified before the Senate Commerce Committee during an oversight hearing of the property and casualty insurance industry, urged Senators to pass S. 545, a bill introduced by Sen. Trent Lott, which would permanently red-flag totaled vehicles.

“Many totaled vehicles and flood-damaged Katrina cars are making it back onto the roadways when unscrupulous rebuilders buy an insurance-totaled vehicle at a salvage auction, refurbish it, and then attempt to resell it without disclosing the vehicle's significant damage history. In many cases, a vehicle with a salvage title can be easily ‘cleaned’ or ‘washed’ in a state with weak title disclosure rules,” said Regan.

Regan said the problem exists because of confusing, incomplete, and contradictory state titling systems and because insurance companies tend to underreport total-loss declarations. DMVs and title history services may never get information about vehicles totaled by insurance companies, since not all total-loss vehicles are retitled to reflect the severity of the damage, according to Regan.

In his remarks, Regan said the Lott legislation is necessary because the public needs access to more complete total-loss information. Insurance companies should provide VIN-based disclosure for all totaled vehicles and the reason for the total loss (flood, collision, stolen, etc.), the date, odometer reading, and whether the airbag deployed. S. 545 would push this information into the public domain through vehicle history providers.

According to Regan, the public needs more-timely total-loss information. The ability of consumers to access VIN-based vehicle data on a timely basis before a vehicle is resold is an essential part of this solution. S. 545 would require insurance companies to disclose the VIN of a total-loss vehicle at the time of payout, thereby immediately creating an electronic record that would warn the public about the history of a severely damaged vehicle.

The public also needs total-loss data available in a searchable format to help assist used-car buyers prior to purchasing a vehicle, said Regan. Insurance companies are the first to be informed that a vehicle has been totaled and they already track these vehicles in their own databases.