What form of title must an insurer obtain in connection with the sale of
a vehicle that has been acquired through the settlement of a claim?
Pursuant to Arizona Transportation Code § 28-2091:
If a vehicle that is subject to titling or registration pursuant to this
chapter becomes a salvage vehicle or nonrepairable vehicle and is
acquired by an insurance company as a result of a total loss
insurance settlement, the insurance company or its authorized agent
shall submit an application to the department within thirty days after
the title is properly assigned by the owner to the insurance company,
with all liens released, on a form prescribed by the department for a
salvage certificate of title or nonrepairable vehicle certificate of title.
[§ 28-2091 (A)]
The department shall issue a certificate of title to a vehicle that has
been issued a salvage certificate of title as a result of a total loss
settlement by reason of theft if the vehicle is recovered and was not
wrecked or stripped of essential parts. For the purposes of this
subsection, "essential parts" means integral and body parts, the
removal, alteration or substitution of which will tend to conceal the
identity or substantially alter the appearance of the vehicle. [§ 28-
2091 (H)]
"Nonrepairable vehicle" means a vehicle of a type that is otherwise
subject to titling and registration pursuant to this chapter (Chapter 7
– Certificate of Title and Registration) and that either:
Has no resale value except as a source of parts or scrap metal and
the owner or insurer designates the vehicle solely as a source of parts
or scrap metal.
Is a completely stripped vehicle that is recovered from theft and
that is missing the engine or motor, the transmission, all of the bolton sheet metal body panels, all of the doors and hatches,
substantially all of the interior components and substantially all of
the grill and light assemblies or that the owner designates has little
or no resale value except its worth as a source of scrap metal or as a
source of a vehicle identification number that could be used illegally.
Is a completely burned vehicle that has been burned to the extent
that there are no usable or repairable body or interior components,
tires and wheels, engine or motor or transmission and that the owner
irreversibly designates as having little or no resale value except as a
source of scrap metal or as a source of a vehicle identification
number that could be used illegally. [28-2091 T(2)]
“Nonrepairable vehicle certificate of title" means a vehicle
ownership document issued to the owner of a nonrepairable vehicle.
[28-2091 T(3)]
"Salvage vehicle" means a vehicle, other than a nonrepairable
vehicle, of a type that is subject to titling and registration pursuant to
this chapter (Chapter 7 – Certificate of Title and Registration) and
that has been stolen, wrecked, destroyed, flood or water damaged or
otherwise damaged to the extent that the owner, leasing company,
financial institution or insurance company considers it uneconomical
to repair the vehicle. [§ 28-2091 T(4)]
Pursuant to Arizona Transportation Code § 28-2096(B):
If the department determines that a flood or water damaged vehicle
is actually a total loss insurance settlement vehicle, the department
may issue: back to top
What documents must an insurer provide to Copart in order to sell a
vehicle on a Certificate of Title branded “Salvage”?
The insurer shall provide Copart with a Certificate of Title or a comparable
ownership document issued by another state or jurisdiction (either endorsed
over to the insurer and notarized or accompanied by a notarized power of
attorney), an odometer disclosure statement, a release of any liens, an ACV,
and a cost of repair.
Copart will submit these documents along with a Title Application and the
appropriate fee to the Motor Vehicle Division for processing.
Thereafter, the Motor Vehicle Division shall issue a Certificate of Title
branded “Salvage” in the name of the insurer.
Copart, acting under a power of attorney for the insurer, will then sell the
vehicle at auction and reassign the insurer’s Certificate of Title branded
“Salvage” to the purchaser. [See Arizona Transportation Code, §§ 28-2003,
28-2091] back to top
What documents must an insurer provide to Copart in order to sell a
vehicle on a Certificate of Title branded “Nonrepairable”?
The insurer shall provide Copart with a Certificate of Title or a comparable
ownership document issued by another state or jurisdiction (either endorsed
over to the insurer and notarized or accompanied by a notarized power of
attorney), an odometer disclosure statement, a release of any liens, an ACV,
and a cost of repair.
Copart will submit these documents along with a Title Application and the
appropriate fee to the Motor Vehicle Division for processing.
Thereafter, the Motor Vehicle Division shall issue a Certificate of Title
branded “Nonrepairable” in the name of the insurer.
Copart, acting under a power of attorney for the insurer, will then sell the
vehicle at auction and reassign the insurer’s Certificate of Title branded
“Nonrepairable” to the purchaser. [See Arizona Transportation Code, §§
28-2003, 28-2091] back to top
What documents must an insurer provide to Copart in order to sell a
recovered theft vehicle recovered substantially intact with no
substantial damage, where title is still in the name of the insured?
When a vehicle has been stolen, the insurer shall provide Copart with a
Title or a comparable ownership document issued by another state or
jurisdiction (either endorsed over to the insurer or accompanied by a power
of attorney), an odometer disclosure statement with last known mileage,
and a release of any liens.
After receipt of these documents, Copart will submit these documents along
with a Title Application and the appropriate fee to the Motor Vehicle
Division for processing.
Thereafter, the Motor Vehicle Division shall issue Certificate of Title
branded “Salvage” in the name of the insurer. Upon receipt, Copart will
forward the Certificate of Title branded “Salvage” to the insurer for
safekeeping.
If the vehicle is recovered, the Certificate of Title branded “Salvage” along
with an ACV and a cost of repair will be returned to Copart by the insurer
in order to obtain the appropriate title depending upon the damage to the
vehicle.
If the vehicle has no damage, and the insurer provides an affidavit stating
that there has been no damage and requests a clean title, the following steps
are required in the state of Arizona to return a recovered theft vehicle back
to clean title status. This process called a Level III inspection. There are
(3) steps that must be adhered to before the salvage brand on a title can be
removed from a recovered theft vehicle:
A representative from the State of Arizona must physically
inspect every unit seeking this change. A licensed state inspector performs
this inspection “off-site” and it involves inspection fee and tow fee to and
from the state inspector’s facility.
The seller will then forward an air bag affidavit form (AZ-Dot
form # 96-0320) to Copart ensuring that the airbags in the vehicle have not
been removed or altered.
Once these two steps have been completed, Copart will then
submit an application to the state of Arizona requesting a correction to
“clean” title status for this particular vehicle. This takes about 3-6 weeks to
receive back from the state. The vehicle will be titled as a Clean Title with
Salvage History and will be represented as such when it is sold.
Otherwise, the vehicle remains on a Certificate of Title branded “Salvage”.
Specifically, Arizona Transportation Code § 28-2091(I) states that “the
department shall issue a certificate of title to a vehicle that has been issued
a salvage certificate of title as a result of a total loss settlement by reason of
theft if the vehicle is recovered and was not wrecked or stripped of essential
parts." For the purposes of this subsection, "essential parts" means
"integral and body parts, the removal, alteration or substitution of which
will tend to conceal the identity or substantially alter the appearance of the
vehicle.”
Thereafter, Copart, acting upon a power of attorney for the insurer, will
then sell the vehicle at auction and reassign the insurer’s Certificate of Title
to the purchaser. [See Arizona Transportation Code, §§ 28-2003, 28-2091] back to top
What steps must an insurer take in Arizona to process an ownerretained vehicle?
Pursuant to Arizona Transportation Code § 28-2091:
Except for vehicles registered pursuant to § 28-2482,
28-2483 or 28-2484, if the owner retains possession of a salvage
vehicle or nonrepairable vehicle, the owner shall comply with this section before receiving a total loss settlement from the insurance
company or otherwise disposing of the vehicle.
Any other owner of a vehicle that is a salvage vehicle
or nonrepairable vehicle shall apply for a salvage certificate of title
or nonrepairable vehicle certificate of title pursuant to this section.
On receipt of a proper application, the department shall
issue a salvage certificate of title or nonrepairable vehicle certificate
of title for the vehicle.
If the department issues a nonrepairable vehicle
certificate of title for a vehicle, the registration of the vehicle is
cancelled. The front of a nonrepairable vehicle certificate of title
shall be branded with the word "nonrepairable". The ownership of a
vehicle for which a nonrepairable vehicle certificate of title has been
issued shall not be reassigned more than two times on that certificate
of title. If a nonrepairable vehicle certificate of title is issued for a
vehicle, the department shall not issue any further certificate of title
for that vehicle. back to top
What legal duties are imposed upon a lienholder following satisfaction
of the lien?
When a holder of a lien or encumbrance receives payment in full
satisfying a lien or encumbrance recorded under this article, the holder of
the lien or encumbrance shall release the lien or encumbrance and deliver
the certificate of title to the next holder of a lien or encumbrance entitled to
possession of the certificate of title or, if there is not another holder of a lien
or encumbrance entitled to possession of the certificate of title, to the owner
of the vehicle at the address shown on the certificate of title or, if the holder
of the lien or encumbrance has been previously notified of sale or transfer
of the vehicle, to the person who is legally entitled to possession.
If a holder of a lien or encumbrance assigns the obligation and the holder
lawfully has possession of the certificate of title, the holder shall deliver the
certificate of title at the time of assignment to the holder's assignee. If a
holder of a lien or encumbrance is not entitled to possession of the
certificate of title when the holder assigns the obligation, the holder shall
immediately deliver the certificate of title to the assignee when the holder
becomes lawfully entitled to and obtains lawful possession of the certificate
of title. The holder's assignee is entitled to hold the certificate of title until
the obligation is satisfied. When the obligation is satisfied, the assignee
shall deliver the certificate of title to the next holder of a lien or
encumbrance entitled to possession of the certificate of title or, if there is
not another holder of a lien or encumbrance entitled to possession of the
certificate of title, to the owner of the vehicle as prescribed in subsection A
of this section.
If a holder of a lien or encumbrance who possesses a certificate of title
as provided in this article refuses or fails to surrender the certificate of title
to the person who is legally entitled to possession of the certificate of title
on that person's request and within fifteen business days after the holder
receives payment in full satisfaction of the holder's lien or encumbrance,
after an opportunity for an administrative hearing, the department may
impose and collect a civil penalty from the holder of the lien or
encumbrance to be deposited in the state highway fund established by § 28-
6991 as follows:
Fifty dollars if the certificate of title is surrendered in accordance with
this subsection within three additional business days.
The penalty provided for in paragraph 1 of this subsection plus fifty
dollars for each additional day exceeding eighteen business days that the
certificate of title is not surrendered in accordance with this subsection up
to a maximum of five hundred dollars for each certificate of title. [See
Arizona Transportation Code, § 28-2134] back to top
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