WASHINGTON -- Something good could yet arise from the rubble of Hurricane Katrina: a remedy to the vexing problem of title washing.
That's the practice of getting a clean title for a wrecked, flood-damaged or stolen vehicle and then reselling it -- after possibly inadequate repairs -- to an unsuspecting consumer or dealer.
A proposal to Congress by the National Automobile Dealers Association would require insurers to report immediately whenever a vehicle is declared a total loss.
Under the NADA plan, vehicle identification numbers for total-loss cars and trucks would go into an accessible database. Buyers thus could avoid suspect vehicles that had been moved to other states, even if the new titles no longer reflected a designation from the previous state that the vehicle had been wrecked, flooded or stolen.Title washing -- the name given to moving damaged vehicles to states with looser laws about revealing previous damage -- is back on the congressional agenda because of worries that vehicles damaged by Katrina and other disasters will wind up with clean titles on dealer lots and in family driveways.
Some say NADA's approach is wrong. David Snyder, assistant general counsel of the American Insurance Association, said NADA's proposed database would be "an ineffective response to a very real problem."
Snyder told Automotive News states should be required to recognize and maintain previous designations of damage on titles transferred from other states. He also advocated an electronic network linking state motor vehicle bureaus.
NADA officials say consumers need to be protected because hundreds of thousands of vehicles were damaged in last year's hurricanes -- and also because millions of cars and trucks are wrecked each year.
David Regan, NADA's vice president for legislative affairs, told a House subcommittee last week: "Insurance companies have a powerful economic incentive to oppose more aggressive title laws or to underreport under existing laws."
Regan testified that Congress should direct the Justice Department to issue rules creating a total-loss database. He said the legal authority for the move exists in a 1992 law aimed at combating vehicle theft.
Rep. Joe Barton, R-Texas, chairman of the House Committee on Energy and Commerce, said he and others would draft legislation. The panel's subcommittee on consumer protection took testimony on title washing March 1. Rep. Cliff Stearns, R-Fla., the subcommittee's chairman, said the insurance industry was invited to send a witness but declined.
You may e-mail Harry Stoffer at [email protected]