The new salvage law, which is in effect on October 1, 1993, will have a great impact on our handling of total losses with insured's and claimant's.

The salvage law dictates:

        "If an insurance company declares it economically impractical to repair a motor vehicle, and agrees to pay to the insured or claimant owner an amount in settlement of a claim against a policy of motor vehicle insurance covering the motor vehicle, and agrees to permit the insured or claimant owner to retain possession of the motor vehicle, the insurance company shall not pay the insured or claimant owner any amount in settlement of the insurance claim until the owner obtains a salvage certificate of title to the vehicle and furnishes a copy of the salvage certificate of title to the insurance company".
 

Before the enactment of this law, we offered two options to our insured' s and claimant,' s. We could keep the salvage to the vehicle and sell it after settlement, or the owner could keep the salvage after we deducted a certain amount from their actual cash settlement for the salvage value.  Often an insured or claimant would opt to retain the salvage because they felt it was repairable, or keep the vehicle for parts.  Sometimes the vehicle is actually operable and the owner preferred obtaining the cash settlement and continue to drive the vehicle; "as is".
 

This is no longer possible.  The owner must obtain a salvage certificate of title and furnish us with a copy of the certificate before we can pay anything.  This is state mandated and is not an option on our part.  It is possible that you will get complaints f rom your client' s or claimant' s regarding the insurance company refusing to settle.  If it is regarding a total loss, you may be able to explain to them how this new law works.
 
 

There is no exception made to this rule if the insured or claimant has a lien on the vehicle.  Therefore, according to the letter of the law, (the insured or claimant would have to actually pay off the lien, obtain the actual title, convert it into a salvage title at the BMV, and then send us a copy before we could issue payment.  Obviously this creates a great amount of hardship on any one with a lien on their vehicle.  We cannot violate this law as the penalties are substantial.  I am forewarning you of the change in the salvage laws so that you will be better prepared to handle possible complaints from our customers.

The purpose behind this law is to avoid unsafe vehicles being driven on the roadways, and also to prevent fraud in the insuring of vehicles.

Prior to this law, someone could have a vehicle that was declared a total loss by an insurance company, however, by going through the owner retained process they never had to purchase a salvage title.  By converting over to the salvage title, any subsequent buyer will be apprised of the fact that this vehicle has been totalled.  In addition to the above procedure, the new salvage law also indicates that if the owner of the vehicle wants to restore the vehicle for operation upon the highways, the owner must make an application to the Clerk of Courts of Common Pleas for a certificate of title.  The BMV will then take the salvage title and issue another certificate of title which shall bear the words 'rebuilt salvage".

The law specifically states that.....        "NO PERSON SHALL OPERATE UPON THE HIGHWAY OF THE

STATE, A MOTOR VEHICLE WITH ONLY A SALVAGE TITLE, EXCEPT TO DELIVER THE MOTOR VEHICLE

PURSUANT TO AN APPOINTMENT OF AN INSPECTION UNDER THIS SECTION".
 

Since most people will likely decide that this is a rather troublesome avenue to take, there is always the option of accepting the full actual cash settlement and allowing the insurance company to take possession of the salvage.  You will have to dispose of it through an authorized salvage yard.
 
 

These new laws make claims handling more difficult.  Our Adjusters and Claim Department are fully apprised of these changes and will be complying with all the rules and regulations as set forth by the Ohio Insurance Department and legislature.