Interpretation ID: mansfield
Via Federal Express
Mr. Christopher C. Mansfield
General Counsel
Liberty Mutual Group
175 Berkeley Street
Boston, MA 02117
Dear Mr. Mansfield:
We have received reports that certain insurance companies may be engaging in transactions that violate Federal odometer disclosure law with respect to vehicles damaged in Hurricane Sandy. Although we are not asserting that your company is engaging in such practices, we are writing to a number of auto insurance companies to remind them of the Federal odometer disclosure law requirements and ask them to review their practices regarding odometer disclosures. These letters do not accuse your company, or any other company, of violating the law.
We understand that when a flood-damaged vehicle is declared a total loss, the insurance company pays the insured the value of the vehicle, becomes the owner, and acquires control over the vehicle from the insured. However the reports we have received indicate that instead of completing the required odometer disclosure, some companies ask the insured to complete the odometer disclosure statement without listing the insurance company as the transferee. According to these reports, the insurance company will not sign the title, make an odometer disclosure, or transfer title. The insurance company then sells the vehicle at auction, keeps the proceeds from the auction, and provides the title with the odometer disclosure statement as signed by the insured to the auction buyer. The next person in the chain of title of the vehicle will be the buyer at auction. The insurance company will essentially be omitted from the chain of title.
In the circumstance described above, an insurance company is considered a transferee when it pays the insureds claim (in return it obtains ownership of the vehicle), and a transferor when it sells the vehicle at auction. See 49 C.F.R. 580.3. As a transferor, the insurance company is required to make certain disclosures.
Under federal odometer disclosure law, 49 U.S.C. 32705, a person transferring ownership of a motor vehicle shall give the transferee written disclosure of the cumulative mileage registered on the odometer. More specifically, under 49 C.F.R. 580.5, each transferor shall disclose the mileage to the transferee in writing on the title or on the document being used to reassign the title [t]his written disclosure must be signed by the transferor, including the printed name. The transferee must sign the disclosure statement, print his name, and return a copy to his transferor.
If you have any questions, please do not hesitate to contact Marie Choi of my staff at (202) 366-1738 or via email at marie.choi@dot.gov.
Sincerely,
O. Kevin Vincent
Chief Counsel
d: 12/20/12
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