Interpretation ID: nht95-4.12

TYPE: INTERPRETATION-NHTSA

DATE: August 31, 1995

FROM: Paul Danner -- General Claim Counsel, State Farm Mutual Automobile Insurance Company

TO: John Womack, Acting Chief Counsel, NHTSA

TITLE: Compliance with Federal Odometer Statement Requirements

ATTACHMT: ATTACHED TO 8/9/89 LETTER FROM Kathleen DeMeter to Madeline Flanagan; Also attached to letter dated 11/28/95 from Samuel Dubbin to Paul Danner (Part 580)

TEXT: Dear Mr. Womack:

On behalf of State Farm, I am seeking an interpretation of federal odometer requirements in the situation where State Farm is settling a total theft claim with a policyholder.

State Farm handles thousands of vehicle theft claims each year. Many times, the car is not recovered at the time we settle these claims. Federal odometer disclosure laws and the regulations enacted by authority of those laws, do not provide a clear dir ection as to how the odometer disclosure statement should be completed when a vehicle is unavailable to the transferor at the time they pass title to State Farm.

The motor vehicle departments of various states have provided different interpretations. On August 30, I spoke with Mr. Dick Morse, Chief of the Odometer Fraud Staff in the Department of Transportation. Mr. Morse was candid and practical in suggesting how an insurer should comply in this circumstance. He suggested the insured-transferor should enter a figure on the disclosure form which certifies mileage to the best of their knowledge, even though it is understood that figure will be a "best guess est imate". If the insured-transferor is aware of circumstances which would require additional discrepancy statements to be marked, that should also cocur.

Mr. Morse further indicated an insurer-transferee should then process title documents in accordance with appropriate state law. Some states require a title to be placed in the name of the insurer - transferee as soon as practical. Other states do not al low transfer of title unless the vehicle is eventually recovered.

Assuming title is immediately or eventually recorded in the insurer-transferor's name, and the vehicle is subsequently recovered, the next issue is how mileage then appearing on the odometer statement should be recorded when the vehicle is sold as "salva ge". Mr. Morse indicated the insurer should inspect the vehicle and record the actual mileage as it appears. If the odometer reading appears to be accurate, no discrepancy needs to marked off. If the reading is less than what the "best guess estimate" had been, then a discrepancy would need to be recorded. If any

P2 other circumstance caused the insurer to question whether the mileage was accurate, then the appropriate discrepancy should be marked off.

It is the intent of State Farm to comply with odometer disclosure requirements in every transaction we handle. We are therefore requesting an official interpretation from your office indicating whether Mr. Morse's suggested approach to completion of odo meter disclosure forms complies with the Department's legal interpretation of statutes and regulations in this area.

Sincerely,