The vehicles we drive today have become amazingly more complexover the last decade. Advanced electronics for traction control,anti-lock brakes and engine management are commonplace in vehicleswe insure or repair. These computer modules can add thousands tothe cost of a repair and may cause vehicles to unnecessarily totalmerely because a plug-in component is bad.

How many auto-claims managers have received that call about aheavy-hit car after the repairs were finished, only to find whenre-setting the vehicle-electronic codes that a plug-in sensor ormodule was bad and pushed that car over the threshold. In somestates, the only remedy is to total out the repaired vehicle, sellit with a salvage title and settle the vehicle as a total loss withthe owner—who will likely be pretty steamed after all this time. Isit really right to total out a vehicle because of the cost of aplug-in piece of equipment?

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Similarly, we see many cars that—because of fear of that unknownelectrical/airbag/computer supplement—end up being declared totallosses and causing a potential economic hardship on the vehicleowner, all in the name of following a state's total-lossregulation.

Let's face it, most states' total-loss regulations were writtenwhen cars were less complex and it was easier to accuratelyestimate damages. Isn't it time we looked at changing that?Recently the Nevada Collision Industry Association did justthat—and I believe it will benefit the vehicle owner, insurer andthe repairer. Simply put, the regulation "backs out" the cost ofthe electronic components when calculating the total-loss equation,aiming to put more cars back in the repair shop and ultimately inthe vehicle owner's garage. An interesting side benefit (and amajor reason I believe the bill passed) is that repairing cars isgood for a state's economy. Early calculations indicate that theannual impact of sales taxes in Nevada paid on thesehigher-dollar-amount estimates that end up being repaired will bein excess of $800,000. Not to mention that the workforceimplication of selling more parts and repairing more cars is likelyto be equally as beneficial.

This is a well-crafted piece of legislation that does not takeaway the total-loss decision process from the insurer, but trulyaims at repairing those cars that come close to the thresholdprimarily because of expensive electronics. Because it benefits allparties in the repair process, I encourage insurance andcollision-repair lobbyists to look at Nevada NRS 487.790 to see ifsimilar changes could be made to benefit yourstate.    

Statements and opinions expressed in this blog are solelythose of the author. They are not offered as and do not constitutelegal advice or opinion of Mitchell Internationa Inc.