Claims News Service, Dec. 2, 12:52 p.m. EST -- The PropertyCasualty Insurers Association of America (PCI) is urging LouisianaGov. Kathleen Blanco to veto a bill that would require all vehiclesdetermined to be "total" losses as a result of recent flooding tobe crushed. The Louisiana Legislature passed the bill on November20th, 2005.

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In a letter sent to Gov. Blanco, Greg LaCost, assistant vicepresident, regional manager and counsel, stated, "While PCI favorsremoving contaminated vehicles from the roads following HurricanesKatrina and Rita, House Bill 11 is overly burdensome by notlimiting itself to vehicles that are dangerous to the public."

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LaCost said that insurers will have to take older model vehiclesaway from consumers even if the consumer wants to repair it. Theinsurer would then only pay the total figure less the deductible.Those consumers will be forced to buy a new vehicle in an automarket where there will be a drastic decline in used vehicles. Ifthe governor vetoes the bill, consumers may be able to keep thevehicle, but the car would have to be branded "floodedsalvage."

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For carriers, the proposal could put them in opposition to theconsumer's interest and could also lead to lower salvage prices forthese vehicles, PCI asserts. The result of the lower salvage pricesmight mean an increase in insurance premiums, especially inflood-prone areas like New Orleans, southern Louisiana, and anyarea located near rivers or levees.

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"This bill is not the solution to deal with the flooded vehiclesissue in Louisiana," said LaCost. "HB 11 is destructive toLouisiana commerce and consumers by not limiting itself to vehiclesthat are dangerous to the public. While vehicles contaminated bysalt water or biohazard materials should be disassembled and takenoff the roads, HB 11 would result in the destruction of thousandsof vehicles that could be salvaged."

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