WATER DAMAGED VEHICLES MUST BE ID’D

December 5, 2005

In the wake of the catastrophic pro-perty damage occurring during the 2005 and 2004 hurricane seasons, the Arkansas Insurance Depart-ment believes owners may be selling cars and other vehicles without disclosing the fact that the vehicle has been damaged by water.

The department issued a reminder to insurers that state law requires “water-damaged” insured motor vehicles to be identified as “damaged” on the certificate of title. Arkansas Code Annotated Section 27-14-2301 et seq., which defines a “water-damaged” insured motor vehicle for purposes of requiring a “damaged” certificate of title, states:

“When a motor vehicle is water-damaged or sustains damage in an amount equal to or exceeding seventy percent (70%) of its average retail value, … the owner, or insurance company if it obtains ownership of the vehicle through transfer of title as the result of a settlement of an insurance claim, shall forward the properly endorsed certificate of title to the office [Office of Motor Vehicles Division of the Arkansas Department of Finance and Administration] together with a fee in the amount now or hereafter prescribed by law for the registration and issuance of a certificate of title.”

Proper notification by insurers allows a vehicle title to be identified properly and puts the end purchaser on notice of past vehicle use, defects, damages, and restrictions regarding sale and transferability. The owner or insurance company, as the case may be, may not dispose of a motor vehicle that is water-damaged before it has obtained a damage certificate from the Office of Motor Vehicles.

Willful violations of these provisions of Arkansas law are punishable as misdemeanors. The department also may take administrative action, if it deems necessary, against licensed insurers violating these requirements.

Topics Auto Arkansas

Was this article valuable?

Here are more articles you may enjoy.

From This Issue

Insurance Journal Magazine December 5, 2005
December 5, 2005
Insurance Journal Magazine

2005 Program Directory, Vol. II