The U.S. Department of Justice recently released the final rules for
the National Motor Vehicle Title Information System (NMVTIS), created
by a 1992 law to prevent title washing. The rules, which go into effect
April 1, will require insurers to report vehicles that have been
declared total losses under state law and by their own policies.

Under the rules, insurers will provide the system with VINs, the date
vehicles are marked for salvage yards, the name of the insured from
whom the vehicle was obtained and the name of the owner at the time of
the filing. The system is meant to link total loss information
collected by state motor vehicle departments to reduce fraud.

However, the law only requires monthly reporting, and 14 states are not
yet participating in the NMVTIS, according to the National Automobile
Dealers Association (NADA).

“Unfortunately, many states are reluctant to provide their total-loss
information to the NMVTIS database, which is why legislation is still
needed,” said Ivette Rivera, NADA executive director of legislative
affairs.

To improve the NMVTIS, the U.S. House of Representatives and Senate are
considering legislation (H.R. 1257 and S.B. 202) that would require
insurance companies to disclose the VINs of totaled cars to vehicle
history providers before the vehicle gets back into the marketplace and
make the reporting requirement electronic and timelier to eliminate the
window for fraud.

The bills would also allow commercial tracking of totaled vehicles so
consumers and dealers could track the VINs of totaled vehicles using
multiple VIN lookups and searches.

“A public-private partnership that combines NMVTIS with the
technological expertise of private sector vehicle history report
companies would allow anyone buying used cars – consumers, businesses,
dealers, auto auctions, etc. – to more easily identify one of these
totaled cars or trucks,” Rivera said.