New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel has issued the following informal opinion on February 16, 2000 representing the position of the New York State Insurance Department.

Salvage Vehicle Branding

Questions Presented:

May an insurer take possession of and title to a vehicle which it declared to be a total loss where the cost to repair was less than 75% of the vehicle's cash value without obtaining a "REBUILT SALVAGE" branded title or does it have to forward the title to the Department of Motor Vehicles ("DMV") for processing and branding?

Conclusion:

The Insurance Department's Regulation in this area (N.Y. Comp. Codes R. & Regs. tit. 11, §216.7(b)(16)(1999)) does not apply to the situation described in the fact pattern. However, the insurer must forward the title to DMV for processing and branding. It was suggested that the party refer the question to the New York State Department of Motor Vehicles, Title Services Bureau, Empire State Plaza, Albany, N.Y. 12228, which is responsible for processing and branding titles.

Facts:

An insured had a 1999 Saab automobile with an actual cash value of $28,000. The vehicle received damage in a collision totaling $16,800 (60% of the vehicle's cash value). The insurer chose to consider the vehicle a total loss. It retained the vehicle and its title and paid the insured to settle the claim.

The subject party is concerned that the insurer may sell the totaled vehicle at a higher price with a clean title after having rebuilt it.

Analysis:

N.Y. Comp. Codes R. Regs. tit. 11, §216.7(b)(16) concerns salvage vehicle branding and applies to losses where the cost to repair the damaged vehicle exceeds 75% of the vehicle's actual cash value. Since in this example, the cost to repair was less (60%), Section 216.7(b)(16) does not apply. Last year, DMV promulgated an amendment to its Regulation in N.Y. Comp. Codes R. & Regs. tit. 15, §20.20 (1999), setting forth three situations in which title to a damaged vehicle must be branded "REBUILT SALVAGE". One situation provides that title must be branded where there is a total loss. The insurer is required to notify DMV when there is a total loss and the insurer would file a salvage certificate (form MV-907A).

According to DMV's Regulatory Impact Statement, as published on page 16 of the December 9, 1998 edition of New York State Register, the legislative objective of those N.Y. Vehicle and Traffic Law statutes and concomitant DMV regulations that concern titles of motor vehicles is that such titles must contain full and accurate information about the status and condition of the vehicle. By requiring the transferor to disclose if a vehicle has been severely damaged and is rebuilt salvage, the prospective purchaser would have important information to consider about the value of the vehicle offered for sale.

For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City office.