Interpretation ID: nht95-7.48

TYPE: INTERPRETATION-NHTSA

DATE: November 28, 1995

FROM: Samuel J. Dubbin -- Chief Counsel, NHTSA

TO: Paul Danner, Esq. -- General Claim Counsel, State Farm Mutual Automobile Insurance Company

TITLE: NONE

ATTACHMT: ATTACHED TO 8/31/95 LETTER FROM Paul Danner to John Womack; Also attached to 8/9/89 letter from Kathleen DeMeter to Madeline Flanagan

TEXT: Dear Mr. Danner:

This is in response to your letter of August 31, 1995, to John Womack, then Acting Chief Counsel of this office, in which you asked for an interpretation of the proper application of Federal odometer disclosure requirements in a situation where an insurer is settling with a vehicle owner on a Claim for theft of the vehicle. Specifically, your letter requests confirmation that the information given to you over the telephone by Mr. Richard Morse, Chief of the Odometer Fraud Staff of the National Highway Traffic Safety Administration (NHTSA) accurately reflects the agency's interpretation of these requirements. For the sake of clarity, I will address the proper procedures to be followed, rather than your letter's rendition of Mr. Morse's advice.

After a vehicle has been stolen, it is of course unavailable to the insured-transferor at the time of title transfer to the insurer. Therefore, when completing the odometer disclosure needed to transfer ownership to the insurance company, the insured-transferor may enter a figure that is his or her "best guess estimate" of the mileage on the odometer at the time the vehicle was stolen, not at the time of transfer to the insurer-transferee. In addition, the odometer disclosure must be dated as of the date of the theft, not as of the date of the transfer to the insurance company. The insured must certify on the odometer disclosure as to whether the odometer reading at the limits of the odometer, as appropriate.

In 1989, the agency issued an interpretation letter stating that this was the proper procedure for a lessee to follow when completing a disclosure to the lessor under 49 CFR @580.7 for a vehicle that had been stolen. That interpretation is equally applicable to the situation in which the owner, rather than the lessee, is making an odometer disclosure for a stolen vehicle. I have enclosed a copy of that interpretation letter fro your information.

P2

As for the other issues raised in your letter, the following interpretation applies. Once the insured-transferor has completed the odometer disclosure and otherwise complied with requirements of state law for title transfer, the insurer-transferee should then follow the procedures required by the appropriate state law to obtain title to the vehicle. If the vehicle is subsequently recovered and the insurer sells it for salvage, the insurer (which in this transaction will be the transferor) must inspect the vehicle and record the mileage that appears on the odometer at that time. If the insurer has no reason to believe that the mileage on the odometer is not the actual mileage on the vehicle, it must certify on the odometer disclosure that the mileage is the actual mileage on the vehicle. However, if the insurer does have reason to believe that the mileage shown on the odometer is not actual (e.g., if it is less than the mileage shown on the odometer disclosure statement provided to the insurer by the insured when title was transferred to the insurance company), it must so certify on the odometer disclosure statement given to its transferee (the salvage company in your example), and indicate on the statement that there is an odometer discrepancy.

I hope this letter answers your questions about the procedures to be followed by the parties to the transactions you describe. If you have any further questions regarding legal interpretations of the Federal odometer statute and regulations, please contact Eileen Leahy, an attorney on my staff, at the above address or at 202-366-5263.

Sincerely,