Claims News Service, Dec. 2, 12:52 p.m. EST -- The Property Casualty Insurers Association of America (PCI) is urging Louisiana Gov. Kathleen Blanco to veto a bill that would require all vehicles determined to be "total" losses as a result of recent flooding to be crushed. The Louisiana Legislature passed the bill on November 20th, 2005.
In a letter sent to Gov. Blanco, Greg LaCost, assistant vice president, regional manager and counsel, stated, "While PCI favors removing contaminated vehicles from the roads following Hurricanes Katrina and Rita, House Bill 11 is overly burdensome by not limiting itself to vehicles that are dangerous to the public."
LaCost said that insurers will have to take older model vehicles away from consumers even if the consumer wants to repair it. The insurer would then only pay the total figure less the deductible. Those consumers will be forced to buy a new vehicle in an auto market where there will be a drastic decline in used vehicles. If the governor vetoes the bill, consumers may be able to keep the vehicle, but the car would have to be branded "flooded salvage."
For carriers, the proposal could put them in opposition to the consumer's interest and could also lead to lower salvage prices for these vehicles, PCI asserts. The result of the lower salvage prices might mean an increase in insurance premiums, especially in flood-prone areas like New Orleans, southern Louisiana, and any area located near rivers or levees.
"This bill is not the solution to deal with the flooded vehicles issue in Louisiana," said LaCost. "HB 11 is destructive to Louisiana commerce and consumers by not limiting itself to vehicles that are dangerous to the public. While vehicles contaminated by salt water or biohazard materials should be disassembled and taken off the roads, HB 11 would result in the destruction of thousands of vehicles that could be salvaged."
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