South Dakota bill seeks regulation on total loss thresholds
A South Dakota bill would ban insurance companies from declaring a motor vehicle a total loss unless the cost of repairs meets or exceeds 75% of the actual cash value before it was damaged.
SB 2271 would allow insurers to declare a total loss only with a written request from the vehicle owner.
Pete Stemper, executive director of the South Dakota Auto Body Association, said this is one of five issues that his association decided needed to be changed in the state.
“I know people assume it is about profiting the body shops, but it is absolutely the opposite,” Stemper said. “It is 100% about giving those individuals who don’t have the cash flow to replace that vehicle the opportunity to at least say yes or no.”
Consumers may have to pay more out of pocket and could have trouble finding a replacement vehicle, he said.
“It is a consumer-driven attempt by the body shops because we are the people who physically have to see these people sitting across from us and see what they are going through, and it is disheartening for us,” Stemper said.
Insurance companies sometimes lower the total loss threshold if they can make more profit selling the salvaged vehicle, he said.
Stemper sent an email to more than 200 members asking for their support of the bill. The email states that the bill keeps decision-making power with the vehicle owner.
It also reduces unnecessary salvage waste and lessens environmental impact, the email says.
“As automotive repair professionals and small business operators, we see firsthand how premature totals negatively affect families and local economies,” the email says. “Vehicles that could be safely repaired are removed from service, while customers are left searching for costly replacements in an already tight market. This legislation corrects that imbalance and prioritizes fairness and common sense.”
The association is working with a lobbyist on the bill. The lobbyist also helped the association pass a bill to curb repair insurance fraud last year.
Automotive News just ran an opinion piece looking at how current market shifts have some franchised dealerships retailing branded or salvaged titles.
The piece follows an Automotive News article that explores the shift in the market.
“Once, insurance companies totaled cars because of body and frame damage from severe crashes, but now they write off easily repairable cars because of lesser impacts that impair expensive electronics,” the article says. “That leaves franchised dealers facing a stark choice: Expand into once-untouchable inventory or watch budget-conscious buyers disappear to Facebook Marketplace, independent used-car dealers, and national chains specializing in repaired branded-title cars.”
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Photo of South Dakota capital courtesy of Gabriel Shakour/iStock