The Property Casualty Insurers Association of America (PCI) has urged Louisiana Gov. Kathleen Blanco to veto a bill that would require all vehicles determined to be “total” losses as a result of recent flooding to be crushed.
In a letter sent to Gov. Blanco, Greg LaCost, assistant vice president, regional manager and counsel, states, “While PCI favors removing contaminated vehicles from the roads following Hurricanes Katrina and Rita, House Bill 11 is overly burdensome by not limiting itself to vehicles that are dangerous to the public.”
LaCost continued, “The industry has been at the forefront of the effort to keep dangerous, contaminated flooded vehicles off the road by not wanting to assume the risk of insuring vehicles that are not safe and that would result in higher claims losses and potential injuries to policyholders. Current Louisiana laws regarding flooded vehicles are stronger than the rest of the country as they require a specific disclosure of a vehicle being involved in a flood prior to any sale. No other state has required crushing flooded vehicles, but other states have salvaged and flooded vehicle title laws. Louisiana is consistent with the country’s views on flooded vehicles by the passage of a salvage and branding law which requires ‘flooded salvage’ to be placed permanently on the flooded vehicle’s title.”
LaCost added that insurers will have to take older model vehicles away from consumers even if the consumer wants to repair it. The insurer would then only pay the total figure less the deductible. Those consumers will be forced to buy a new vehicle in an auto market where there will be a drastic decline in used vehicles. If the governor vetoes the bill, consumers may be able to keep the vehicle, but the car would have to be branded ‘flooded salvage’.
For carriers, the proposal would reportedly put them in opposition to the consumer’s interest and would also lead to lower salvage prices for these vehicles. The result of the lower salvage prices will reportedly mean an increase in insurance premiums especially in flood prone areas like New Orleans, southern Louisiana and any area by rivers or levees.
“This bill is not the solution to deal with the flooded vehicles issue in Louisiana,” said LaCost. “HB 11 is destructive to Louisiana commerce and consumers by not limiting itself to vehicles that are dangerous to the public. While vehicles contaminated by salt water or biohazard materials which can not be easily repaired should be disassembled and taken off the roads, HB 11 would result in the destruction of thousands of vehicles that could be salvaged and therefore we urge the governor to veto it.”
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