Report Title:

Salvaged, Flooded, Nonrepairable Vehicles; Titling Standards and Procedures

Description:

Establishes titling standards and procedures for passenger motor vehicles, including specific titles for salvaged vehicles, nonrepairable vehicles, and flood damaged vehicles; establishes disclosure and labeling requirements for transfers of rebuilt salvage vehicles; establishes civil penalties for violation of titling requirements; authorizes attorney general to enforce titling requirements and to recover damages.

THE SENATE

S.B. NO.

324

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to vehicle salvage.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

MOTOR VEHICLE SALVAGE

   -1 Definitions. For the purposes of this chapter:

"Cost of repairs" means the estimated cost of parts and labor needed to repair the vehicle to its condition immediately before it was wrecked, destroyed, or damaged. If the vehicle has been repaired, the "cost of repair" means the actual cost of the parts and labor used to repair the vehicle to its condition immediately before it was wrecked, destroyed, or damaged.

"Department" means the department of transportation.

"Director" means the director of transportation.

"Fair market value" means the retail value of a passenger motor vehicle as:

(1) Set forth in a current edition of any nationally recognized compilation (to include automated databases) of retail values; or set forth in publications commonly used by the automotive and insurance industries to establish the values of motor vehicles;

(2) Determined pursuant to a market survey of comparable vehicles with regard to condition and equipment;

(3) Determined by an insurance company using any other procedure recognized by the insurance industry, including market surveys, that is applied by the company in a uniform manner; or

(4) Determined at a public auction to which any insurer or owner of the vehicle is invited to participate.

"Flood vehicle" means any passenger motor vehicle that:

(1) Has been acquired by an insurance company as part of a damage settlement due to water damage; or

(2) Has been submerged in water to the point that rising water has reached over the door sill, has entered the passenger and trunk compartment, or has exposed any electrical, computerized, or mechanical component to water; the term shall not include a passenger motor vehicle which, pursuant to an inspection conducted by an insurance adjuster or estimator, a motor vehicle repairer, or motor vehicle dealer in accordance with inspection guidelines or procedures established by the department, is determined:

(A) To have no electrical, computerized, or mechanical components which were damaged by water; or

(B) To have one or more electrical, computerized, or mechanical components which were damaged by water if all such damaged components have been repaired or replaced.

Flood vehicles shall be issued a flood vehicle title.

"Flood vehicle title" means a passenger motor vehicle ownership document issued by the department to the owner of a flood vehicle. A flood vehicle certificate shall be conspicuously labeled with the word "flood" across the front.

"Late model vehicle" means any passenger motor vehicle which:

(1) Has a manufacturer's model year designation of or later than the year in which the vehicle was wrecked, destroyed, or damaged, or any of the eight preceding years; or

(2) Has a retail value of more than $5,000. The department shall adjust the retail value cited in paragraph (2) by $500 increments every five years beginning with an increase to $7,500 on January 1, 2005.

"Nonrepairable vehicle" means any passenger motor vehicle, other than a flood vehicle, that has suffered major damage for which the cost of repair exceeds ninety per cent of the vehicle's fair market value immediately preceding the time it was wrecked, destroyed, or damaged, or a vehicle that the owner irreversibly designates as a source of parts or scrap. Nonrepairable vehicles are deemed incapable of safe operation for use on roads or highways and have no resale value except as a source of parts or scrap. Nonrepairable vehicles shall be issued a nonrepairable vehicle certificate and shall not be titled or registered.

"Nonrepairable vehicle certificate" means a passenger motor vehicle ownership document issued by the State to the owner of a nonrepairable vehicle. A nonrepairable vehicle certificate shall be conspicuously labeled with the word "nonrepairable" across the front.

"Passenger motor vehicle" means any motor vehicle as defined in chapter 291C which is equipped to transport persons.

Passenger motor vehicles that qualify as a salvage vehicle shall be issued a salvage title.

"Salvage title" means a passenger motor vehicle ownership document issued by the State to the owner of a salvage vehicle. A salvage title shall be conspicuously labeled with the word "salvage" across the front.

"Salvage vehicle" means any passenger motor vehicle, other than a flood vehicle or a nonrepairable vehicle, which:

(1) Is a late model vehicle which has been wrecked, destroyed, or damaged, to the extent that the total cost of repairs to rebuild or reconstruct the passenger motor vehicle to its condition immediately before it was wrecked, destroyed, or damaged, and for legal operation on the roads or highways, exceeds seventy-five per cent of the fair market value of the passenger motor vehicle immediately preceding the time it was wrecked, destroyed, or damaged;

(2) Is a late model vehicle which has been wrecked, destroyed, or damaged, and regarding which an insurance company has determined the vehicle to be a total loss or acquired ownership pursuant to a damage settlement (except in the case of a settlement in connection with a recovered stolen vehicle, unless the vehicle sustained damage sufficient to meet the damage threshold prescribed by paragraph (1); or

(3) The owner wishes to voluntarily designate as a salvage vehicle and paragraphs (1) and (2) do not apply. The designation by the owner shall not impose on the insurer of the passenger motor vehicle or on an insurer processing a claim made by or on behalf of the owner of the passenger motor vehicle any obligation or liability.

   -2 Passenger motor vehicle titling. Titling standards, control procedures, methods, and information shall include the following requirements:

(1) It shall be conspicuously indicated on the face of the title or certificate for a passenger motor vehicle, as applicable, if the passenger motor vehicle is a salvage vehicle, a nonrepairable vehicle, or a flood vehicle.

(2) The title documents, the certificates, decals required by this section, and the issuing system shall be designed by the department in a manner that minimizes the opportunity for fraud.

(3) The certificate of title shall include the passenger motor vehicle make, model, body type, year, odometer disclosure, and vehicle identification number.

(4) The title documents shall maintain a uniform layout.

(5) A passenger motor vehicle designated as nonrepairable shall be issued a nonrepairable vehicle certificate and shall not be re-titled.

(6) No duplicate or replacement title shall be issued unless the word "duplicate" is clearly marked on the face thereof.

(7) The department shall employ the following titling and control methods:

(A) If an insurance company is not involved in a damage settlement involving a salvage vehicle, a nonrepairable vehicle, or a flood vehicle, the passenger motor vehicle owner shall apply for a salvage title, nonrepairable vehicle certificate, or flood title, whichever is applicable, before the passenger motor vehicle is repaired or the ownership of the passenger motor vehicle is transferred, but in any event within thirty days after the passenger motor vehicle is damaged, destroyed, or flooded.

(B) If an insurance company, pursuant to a damage settlement, acquires ownership of a passenger motor vehicle that has incurred damage requiring the vehicle to be titled as a salvage vehicle, nonrepairable vehicle, or flood vehicle, the insurance company or salvage facility or other agent on its behalf shall apply for a salvage title or nonrepairable vehicle certificate within thirty days after the title is properly assigned by the owner to the insurance company and delivered to the insurance company or salvage facility or other agent on its behalf with all liens released.

(C) If an insurance company has not assumed ownership of an insured's or claimant's passenger motor vehicle that has incurred damage requiring the vehicle to be titled as a salvage vehicle, flood vehicle, or nonrepairable vehicle, the insurance company shall notify:

(i) The owner of the owner's obligation to apply for a salvage title, nonrepairable vehicle certificate, or flood title for the passenger motor vehicle; and

(ii) The department that a salvage title, nonrepairable vehicle certificate, or flood title should be issued for the vehicle, except to the extent such notification is prohibited by state law. The notices shall be made in writing within thirty days after the insurance company determines that the damage will require a salvage title, a nonrepairable certificate, or flood title and that the vehicle will be left with the owner.

(D) If a leased passenger motor vehicle incurs damage requiring the vehicle to be titled as a salvage vehicle, nonrepairable vehicle, or flood vehicle, the lessor shall apply for a salvage title, nonrepairable vehicle certificate, or flood title within thirty days after being notified by the lessee that the vehicle has been so damaged, except when an insurance company, pursuant to a damage settlement, acquires ownership of the vehicle. The lessee of the vehicle shall inform the lessor that the leased vehicle has been so damaged within thirty days after the occurrence of the damage. Nothing in this subparagraph shall be construed to require that the requirements for notification be contained in the lease itself, as long as the lessor provides effective notice to the lessee of the requirements.

(E) Any person acquiring ownership of a damaged passenger motor vehicle that meets the definition of a salvage, nonrepairable, or flood vehicle for which a salvage title, nonrepairable vehicle certificate, or flood title has not been issued, shall apply for a salvage title, nonrepairable vehicle certificate, or flood title, whichever is applicable. This application shall be made before the vehicle is further transferred, but in any event, within thirty days after ownership is acquired. The requirements of this subparagraph shall not apply to any scrap metal processor that acquires a passenger motor vehicle for the sole purpose of processing it into prepared grades of scrap.

(F) Department records shall note when a nonrepairable vehicle certificate, salvage title, or flood title is issued.

(G) When a passenger motor vehicle has been flattened, baled, burned, or shredded, whichever comes first, the title or nonrepairable vehicle certificate for the vehicle shall be surrendered to the department within thirty days. If the second transferee on a nonrepairable vehicle certificate is unequipped to flatten, bale, or shred the vehicle, the transferee, at the time of final disposal of the vehicle, shall use the services of a professional automotive recycler or professional scrap processor who may flatten, bale, or shred the vehicle and to effect the surrender of the nonrepairable vehicle certificate to the department on behalf of the second transferee. Department records shall be updated to indicate the destruction of the vehicle and no further ownership transactions for the vehicle shall be permitted.

(8) A seller of a passenger motor vehicle that becomes a flood vehicle, prior to the time of transfer of ownership of the vehicle, shall give the transferee a written notice that the vehicle has been damaged by flood, provided the seller has actual knowledge that the vehicle has been damaged by flood. At the time of the next title application for the vehicle, the person applying for the title shall disclose the flood status to the department and the word "flood" shall be conspicuously labeled across the front of the new title.

(9) In the case of a leased passenger motor vehicle, the lessee, within thirty days of the occurrence of the event that caused the vehicle to become a flood vehicle, shall disclose to the lessor in writing that the vehicle is a flood vehicle.

(10) Ownership of a passenger motor vehicle may only be transferred two times while it has a nonrepairable vehicle certificate. A passenger motor vehicle for which a nonrepairable vehicle certificate has been issued shall not be titled or registered for use on roads or highways.

   -3 Disclosure and label requirements on transfer of rebuilt salvage vehicles; written disclosure requirements. (a) Under rules prescribed by the department, a person transferring ownership of a rebuilt salvage vehicle, prior to the time of transfer of ownership of the vehicle, shall disclose to the transferee in writing that the vehicle is a rebuilt salvage vehicle when the transferor has actual knowledge of the status of the vehicle.

(b) A person making a written disclosure required by a rule adopted under subsection (a) shall have the statement notarized.

(c) A person acquiring a rebuilt salvage vehicle for resale may accept a disclosure under subsection (a) only if it is complete.

(d) The department shall adopt rules in accordance with chapter 91 to establish the manner in which information is disclosed and retained under subsection (a).

   -4 Civil penalties. (a) It is unlawful for any person knowingly to:

(1) Make or cause to be made any false statement on an application for a title (or duplicate title) for a passenger motor vehicle or any disclosure made pursuant to section    -3;

(2) Fail to apply for a salvage title when such an application is required;

(3) Alter, forge, or counterfeit a certificate of title (or an assignment thereof), a nonrepairable vehicle certificate, or any disclosure made pursuant to section    -3;

(4) Falsify the results of, or provide false information in the course of an inspection conducted pursuant to section    -2;

(5) Offer to sell any nonrepairable vehicle as a rebuilt salvage vehicle;

(6) Fail to make any disclosure required by section    -2(7);

(7) Fail to make any disclosure required by section   -3;

(8) Violate a rule adopted under this chapter;

(9) Move a vehicle or a vehicle title in interstate commerce for the purpose of avoiding the titling requirements of this chapter; or

(10) Conspire to commit any of the acts enumerated in this section.

(b) Any person who commits an unlawful act as provided in subsection (a) shall be fined a civil penalty of up to $2,000 per offense. A separate violation occurs for each passenger motor vehicle involved in a violation.

   -5 Actions by attorney general. (a) When a person violates any provision of this chapter, the attorney general may bring an action:

(1) To restrain the violation;

(2) To recover amounts for which a person is liable under section    -4; or

(3) To recover the amount of damage suffered by any resident in the State who suffered damage as a result of the knowing commission of an unlawful act under section    -4(a) by another person.

(b) An action under subsection (a) shall be brought in any court of competent jurisdiction within two years after the date on which the violation occurred.

(c) Nothing contained in this section shall prohibit the attorney general or other authorized public official from proceeding in court on the basis of an alleged violation of any civil or criminal statute of the State, including those related to consumer protection.

(d) In addition to actions brought by the attorney general under this section, such an action may also be brought by officers of the State who are authorized to bring actions in the State on behalf of its residents."

SECTION 2. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:

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