During the 2019 General Assembly session, legislators considered Senate Bill (SB) 1364, patroned by Senator John Cosgrove, Jr., and House Bill (HB) 1780, patroned by Delegate Robert Bloxom, Jr. Both bills proposed removing the requirement that a vehicle be late model(*1) in order to meet the definition of salvage vehicle or rebuilt vehicle due to having been either acquired by an insurance company as part of the claims process or damaged to the extent that the estimated cost of repair would exceed the vehicle’s actual cash value. The bills also required that a salvage certificate be issued in the following three situations: when an insurance company acquires a non-late model vehicle as part of the claims process, when an insurance company pays a claim for damage to a non-late model vehicle if the estimated cost to repair that vehicle exceeds 75% of its actual cash value and the vehicle is retained by its owner, and when an uninsured or self-insured non-late model vehicle sustains damage such that the estimated cost of repairs exceeds 75% of the vehicle’s actual cash value. Obtaining a salvage certificate is currently discretionary in each of these situations. The bills would have mandated the current salvage process for no-late model vehicles.

During committee, questions were raised about the fiscal impact of implementing the bills as written. Instead of moving those bills forward during the session, the patrons of both bills requested the Chairs of the Senate and House Transportation Committees to commission the Department of Motor Vehicles (DMV) to review the fiscal impact of implementing the bills and other issues. The Chairs charged DMV to conduct a stakeholder study, report to the House and Senate Transportation Committees by December 2019, and consider the following issues:

• How Virginia currently defines salvage vehicles;

• Whether any consumer has been adversely affected by obtaining and registering a motor vehicle previously declared a total loss and reported to the National Motor Vehicle Title Information System (NMVTIS) without the consumer’s prior knowledge;

• How surrounding states define salvage vehicles;

• The potential harm caused by lack of vehicle history information on non-late model, total loss vehicles;

• The current process used to examine rebuilt vehicles and determine whether the examination for stolen parts is necessary;

• The fiscal impact of making any proposed changes to the salvage vehicle process; and

• Data on the number of clean title vehicles reported to NMVTIS in 2017 and 2018 and the number of registered clean title vehicles that were previously reported to NMVTIS.

DMV held stakeholder meetings on June 6, July 8, and August 6, and conducted a stakeholder phone conference on October 4, 2019. Stakeholders representing auto auctions, auto parts dealers, auto rebuilders and recyclers, salvage dealers, insurers and insurance trade groups, the National Insurance Crime Bureau (NICB), the Office of the Attorney General, the Virginia Association of Chiefs of Police, the Virginia Automobile Dealers Association, the Virginia Automotive Recyclers Association, the Virginia Coalition of Motorcyclists, the Virginia Independent Auto Dealers Association, and the Virginia State Police participated in the meetings.

In an effort to assist stakeholders with developing recommendations, DMV’s internal working group performed research and worked through the American Association of Motor Vehicle Administrators (AAMVA) to conduct two surveys to determine how surrounding states define salvage vehicles. While some of the NMVTIS data regarding registered vehicles that was referenced in the charge letter is not available from NMVTIS, DMV consulted with stakeholders and at the direction of the stakeholder advocating for SB 1364 and HB 1780, DMV staff requested from AAMVA the NMVTIS Virginia title data that is available, as well as NMVTIS junk, salvage and insurance (JSI) information for Virginia titles. DMV also obtained stolen vehicle information from NICB. DMV presented the results of this research and all data received to the stakeholder group. After providing stakeholders with an overview of the current DMV salvage process, agency staff offered a series of options for changing the process for the stakeholders’ consideration.

This report includes summaries of jurisdictional law research and data presented at the stakeholder meetings, a summary of current Virginia law and salvage process, two options for modifying Virginia’s current practice, and the stakeholder discussions and recommendations.

Based on the research, survey responses, data gathered, and stakeholder discussions, the study group recommended no legislative change to Virginia’s salvage law or to DMV’s salvage process. The stakeholder group’s conclusion was not unanimous. The minority opinion is reflected in the report. Stakeholders submitted written responses to this report that are included in the appendices.
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(*1) “Late model vehicle" means the current-year model of a vehicle and the five preceding model years, or any vehicle whose actual cash value is determined to have been at least $10,000 prior to being damaged. Va. Code § 46.2-1600.