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Flooded Vehicles Pose Safety and Consumer Risk Unless Insurers Disclose Vehicle History

November 22, 2006

WASHINGTON, D.C. — PEMCO, a Seattle-based insurance company, announced this week that it will voluntarily disclose vehicle flood damage information to the public. The recent flooding in the Pacific Northwest and the Eastern U.S. has refocused

public attention on the problem of flooded and totaled vehicles being resold to unsuspecting buyers. The National Automobile Dealers Association (NADA) has been pressing the U.S. Congress since the Gulf Hurricanes of 2005 for new federal legislation which would require insurance companies to disclose total loss information to the public so that problem vehicles are red-flagged forever.

The NADA-supported House bill (HR 6093) would rely on existing technology to permanently "red flag" totaled vehicles. The legislation would require insurance companies to make commercially available: the Vehicle Identification Number (VIN) of a totaled vehicle, the reason for the total loss, flood, collision, stolen, etc.), the date of total loss, the odometer reading on that date, and whether the airbag deployed.

Insurance companies totaled approximately five million

vehicles last year due to extensive damage, flooding or theft. Thousands of these damaged vehicles are sold at salvage auctions, rebuilt and re-enter the market with clean titles, so consumers, wholesale auto auctions and dealers may have no way to learn about the total loss.

Both the House and the Senate bills would attack motor

vehicle title fraud at the core by disclosing total loss information before a vehicle is sold at salvage auction, rebuilt, and returned to the market. This Federal legislation would not require any change in state titling laws, but

would give consumers access to valuable information to identify totaled vehicles before these potentially unsafe cars ever re-enter the market.

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