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?
(i) If an insurance company, pursuant to a damage settlement, acquires ownership
of a passenger motor vehicle that has incurred damage requiring the vehicle to be
titled as a salvage vehicle, nonrepairable vehicle, or flood vehicle, the insurance
company either must notify the department electronically or on documents
prescribed by the department for purposes of evidencing the insurance company
in the ownership chain of title or, alternatively, must apply for a salvage title or
nonrepairable vehicle certificate within fifteen (15) days after the title is properly
assigned by the owner to the insurance company, and delivered to the insurance
company with all liens released.
(ii) Notwithstanding the provisions of this or any other law to the contrary, if an
insurance company acquires ownership of a passenger motor vehicle under the
circumstances described in this item and then sells such vehicle, then such
transactions shall be exempt from sales and use tax liability to the same extent
such transactions were exempt from such liability prior to October 1, 1996. If the
vehicle does not meet or exceed the definition of a "salvage vehicle,"
"nonrepairable vehicle" or "flood vehicle," the insurance company is authorized to
endorse change in ownership on the certificate of title as follows:(a ) With regard
to a motor vehicle which is sold "as is" without repairs, change in ownership may
be endorsed on the certificate of title without: (1 ) Obtaining a new certificate of
title; or (2 ) Registering with the sales and use tax division; and(b ) With regard to
a motor vehicle which is sold after repair, the insurance company must first obtain
a certificate of title in its name, unless the transfer is to a licensed dealer or to the
insured, in which cases the procedure set forth in subdivision (1) shall apply. [See
Tennessee Code § 55-3-212 (b)(8)(B)] back to top
The following definitions apply to the above legal citations:
"Flood vehicle" means any passenger motor vehicle which has sustained
substantial water damage as determined by departmental rules and
regulations. Disclosure that a passenger motor vehicle has become a flood
vehicle shall be made at the time of transfer of ownership, and the next
certificate of title issued after such transfer shall be conspicuously labeled
with the word "Flood" across the front;
"Nonrepairable vehicle" means any passenger motor vehicle which is
incapable of safe operation for use on roads or highways and which has no
resale value except as a source of parts or scrap only or which the owner
irreversibly designates as a source of parts or scrap. "Nonrepairable
vehicle" includes, but is not limited to, any passenger motor vehicle which
has sustained salt water damage as a result of salt water entering the
passenger compartment. A nonrepairable vehicle shall be issued a
nonrepairable vehicle certificate and shall never again be titled or
registered;
"Nonrepairable vehicle certificate" means a passenger motor vehicle
ownership document issued by the state to the owner of a nonrepairable
vehicle. Ownership of the passenger motor vehicle may only be
transferred two (2) times on a nonrepairable vehicle certificate. A
passenger motor vehicle for which a nonrepairable vehicle certificate has
been issued can never be titled or registered for use on roads or highways.
A nonrepairable vehicle certificate shall be conspicuously labeled with the
word "Nonrepairable" across the front;
"Passenger motor vehicle" means any vehicle driven or drawn by
mechanical power manufactured primarily for use on the public streets,
roads and highways that is ten (10) model years old or less, including a
multipurpose passenger vehicle or light duty truck when that vehicle or
truck is rated at not more than nine thousand pounds (9,000 lbs.) gross
vehicle weight, except that "passenger motor vehicle" does not include a
motorcycle;
"Salvage title" means a passenger motor vehicle ownership document
issued by the state to the owner of a salvage vehicle. Ownership of the
passenger motor vehicle may be transferred on a salvage title; however, a
passenger motor vehicle for which a salvage title has been issued shall not
be registered for use on the roads or highways unless it has been issued a
rebuilt title. A salvage title shall be conspicuously labeled with the word
"Salvage" across the front;
"Salvage vehicle" means any passenger motor vehicle which has been
wrecked, destroyed, or damaged to the extent that the total estimated or
actual cost of parts and labor to rebuild or reconstruct the passenger motor
vehicle to its pre-accident condition and for legal operation on the roads or
highways exceeds seventy-five percent (75%) of the retail value of the
passenger motor vehicle, as set forth in a current edition of any nationally
recognized compilation (to include automated databases) of retail values.
The value of repair parts for purposes of this subdivision shall be
determined by using the current published retail cost of the repair parts to
be used in the repair, or in the absence of a published retail cost the
reasonable and customary cost in the community where repair parts are
purchased. The labor cost of repairs for purposes of this subdivision shall
be computed by using the hourly labor rate and time allocations that are
reasonable and customary in the automobile repair industry in the
community where the repairs are performed. "Salvage vehicle" also
includes, without regard to whether such passenger motor vehicle meets
the seventy-five percent (75%) threshold specified in the first sentence,
any passenger motor vehicle whose owner may wish to designate as a
salvage vehicle by obtaining a salvage title, without regard to the extent of
the passenger motor vehicle's damage and repairs. Such designation by the
owner shall not impose on the insurer of the passenger motor vehicle or on
an insurer processing a claim made by or on behalf of the owner of the
passenger motor vehicle any obligations or liabilities. [See Tennessee
Code § 55-3-211]
What documents must an insurer provide to Copart in order to sell a vehicle
on a Certificate of Title?
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 or accompanied by a power of attorney), an odometer disclosure
statement, a release of any liens, an ACV, and a cost of repair.
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 to the purchaser. [See
Tennessee Code § 55-3-212] back to top
What documents must an insurer provide to Copart in order to sell a vehicle
on a Certificate of Title branded “Flood Vehicle”?
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 or accompanied by a 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 an Application for Certificate of
Title and Registration and the appropriate fee to the Title and Registration
Division for processing.
Thereafter, the Title and Registration Division shall issue a Certificate of Title
branded “Flood Vehicle” 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 “Flood Vehicle”
to the purchaser. [See Tennessee Code § 55-3-212]back to top
What documents must an insurer provide to Copart in order to sell a vehicle
on a Salvage Certificate?
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 or accompanied by a 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 an Application for Tennessee
Salvage Certificate or Tennessee Nonrepairable Certificate and the appropriate
fee to the Title and Registration Division for processing.
Thereafter, the Title and Registration Division shall issue a Salvage Certificate 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 Salvage Certificate to the purchaser. [See
Tennessee Code § 55-3-212] back to top
What documents must an insurer provide to Copart in order to sell a vehicle
on a Salvage Certificate branded “Water Damage”?
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 or accompanied by a 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 Application for Tennessee
Salvage Certificate or Tennessee Nonrepairable Certificate and the appropriate
fee to the Title and Registration Division for processing.
Thereafter, the Title and Registration Division shall issue a Salvage Certificate
branded “Water Damage” 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 Salvage Certificate branded “Water Damage”
to the purchaser. [See Tennessee Code § 55-3-212] back to top
What documents must an insurer provide to Copart in order to sell a vehicle
on Nonrepairable Certificate?
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 or accompanied by a 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 an Application for Tennessee
Salvage Certificate or Tennessee Nonrepairable Certificate and the appropriate
fee to the Title and Registration Division for processing.
Thereafter, the Title and Registration Division shall issue a Nonrepairable
Certificate 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 Nonrepairable Certificate to the purchaser.
[See Tennessee Code § 55-3-212] 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 Certificate
of 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
an Application for Certificate of Title and Registration and the appropriate fee to
the Title and Registration Division for processing.
Thereafter, the Title and Registration Division shall issue a Certificate of Title in
the insurer’s name. Upon receipt, Copart will forward this title to the insurer for
safekeeping.
If the vehicle is recovered, the title along with an ACV and a cost of repair will be
returned to Copart by the insurer in order to obtain the appropriate title from the
Title and Registration Division depending upon the year of the vehicle and the
damage to the vehicle.
Copart, acting upon a power of attorney for the insurer, will then sell the vehicle
at auction and reassign the insurer’s title to the purchaser. [See Tennessee Code §
55-3-212] back to top
What steps must an insurer take in Tennessee to process an owner-retained
vehicle?
Pursuant to Tennessee Code § 55-3-212:
(C) If an insurance company does not assume ownership of its insured's passenger
motor vehicle that has incurred damage requiring the vehicle to be titled as a
salvage vehicle or nonrepairable vehicle, the insurance company shall:
(i) Notify the insured of the insured's obligation to apply for a salvage title or
nonrepairable vehicle certificate for the passenger motor vehicle and notify the
state passenger motor vehicle titling office that a salvage title or nonrepairable
vehicle certificate should be issued for the vehicle; or
(ii) Withhold payment of the claim until the insured applies for a salvage title or
nonrepairable vehicle certificate.
(D) intentionally omitted
(E) Any person acquiring ownership of a damaged passenger motor vehicle that
meets the definition of a salvage or nonrepairable vehicle for which a salvage title
or nonrepairable vehicle certificate has not been issued must apply for a salvage
title or nonrepairable vehicle certificate, whichever is applicable. This application
must be made before the vehicle is further transferred, but in any event, within
thirty (30) days after ownership is acquired.
What legal duties are imposed upon a lienholder following satisfaction of the
lien?
Pursuant to Tennessee Code § 55-3-114(c), following satisfaction of lien, a
notation shall be made on the certificate of title setting forth the fact that the lien
or encumbrance has been discharged, and it shall be signed by the lienor. The
lienor shall then deliver the certificate of title to the owner within seven (7)
business days from the owner's request, unless the certificate of title shall show on
its face one (1) or more liens or encumbrances still outstanding, in which event
the certificate of title shall be delivered to the next prior lienor, either in person or
by registered mail, and the lienor shall within seventy-two (72) hours notify the
division of the discharge of such lien by registered mail with return receipt
demanded.
Pursuant to Tennessee Code § 55-3-127(b), it is a Class C misdemeanor for any
lienor, including a mortgagee or a vendor, to fail or neglect upon the discharge of
the lien, mortgage or encumbrance, to properly discharge the lien in the manner
hereinabove provided and, if the certificate of title be in the lienor's possession, to
fail to deliver the same to the person entitled to such certificate. back to top
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