PCI: Senate Passage of La. Flooded Vehicles Bill Hurts Consumers

November 22, 2005

In a move that could prove detrimental to Louisiana consumers and insurers, the Louisiana Legislature narrowly passed a bill last night that would require all vehicles determined to be “total” losses as a result of recent flooding to be crushed.

“This bill is not the solution to deal with the flooded vehicles issue in Louisiana,” said Greg LaCost, assistant vice president, regional manager and counsel for the Property Casualty Insurers Association of America (PCI). “While PCI believes that contaminated vehicles should be destroyed for the health and welfare of the public, HB 11 goes well beyond that. It 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 should be disassembled and taken off the roads, HB 11 would result in the destruction of thousands of vehicles that could be salvaged.”

According to PCI, the bill will not afford consumers the ability to fix or keep their totaled vehicles if they have suffered damage to their electrical system, power train or computer, especially with older model vehicles. If a consumer has a car worth $2,000 with a $500 deductible, and the car suffers computer damage in the amount of $1,500, under the current law, the insured could pay the deductible and the carrier could fix the car for the consumer. Under the new proposal, the consumer would reportedly be paid $500 and would be without a car.

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 was reportedly 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.

“While car dealers and manufacturers will benefit, Louisiana consumers, insurers, and rebuilders will suffer from the passage of this bill,” added LaCost. “If this bill passes, Louisiana should expect higher insurance premiums, increased pricing for used vehicles, possible increased cost in new cars due to increased demand, and inability of poorer consumers to buy vehicles because of costs. Current law protects consumers without stalling out needed Louisiana commerce.”

Topics Auto Louisiana Flood Politics

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