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Two Federal Bills Seek to Strengthen Total Loss Reporting Rules Effective April 1

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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.

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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.

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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.

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