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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
salvage vehicles; abandoned; insurance claim
Purpose
Outlines requirements for a salvage auction dealer to provide notice to a salvage vehicle owner or lienholder when an insurance company does not obtain the vehicle's certificate of title due to an insurance claim being denied, lack of policy coverage or lack of cooperation from the salvage vehicle owner. Deems the salvage vehicle an abandoned vehicle if the vehicle is not picked up and fees are not paid within 30 days of the required notice and assigns the salvage vehicle’s certificate of title to the salvage auction dealer in that circumstance.
Background
If a vehicle that is subject to the issuance of a certificate of title or registration becomes a salvage, stolen or nonrepairable vehicle and is acquired by an insurance company as a result of a total loss insurance settlement, the insurance company must submit an application to the Arizona Department of Transportation (ADOT) within 30 days after the certificate of title is assigned by the owner to the insurance company. The application must be submitted with all liens released, on a form authorized by ADOT for a salvage, stolen or nonrepairable vehicle certificate of title. An insurance company or authorized agent that is unable to obtain a properly endorsed certificate of title and a lien satisfaction may apply for a salvage, stolen or nonrepairable certificate of title if the company or agent has made at least two written attempts to obtain the documents.
Statute defines salvage vehicle as a vehicle, other than a nonrepairable vehicle, that: 1) is subject to the issuance of a certificate of title and registration; and 2) has been stolen, wrecked, destroyed, subjected to flood or water damage or otherwise damaged to the extent that the owner, leasing company, financial institution or insurance company considers it uneconomical to repair the vehicle (A.R.S. § 28-2091).
When requesting the release of a vehicle from a towing company storage lot, an insurance company must use a form prescribed by ADOT and present proof of vehicle ownership. The towing company must release the vehicle after receiving the release request and after payment for any reasonable towing, storage and related fees is received (A.R.S. § 28-4847).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows an insurance company to request a salvage auction dealer to take prescribed actions regarding a salvage vehicle located on the dealer's property that is subject to an insurance claim, after:
a) satisfying the insurance company's statutory requirements that apply when requesting the release of a vehicle from a storage lot; and
b) paying all fees owed to the storage facility that held the salvage vehicle before the dealer acquired the salvage vehicle.
2. Requires an insurance company to provide notice to a salvage auction dealer to release a salvage vehicle to the vehicle owner or any lienholder on record with ADOT, if the insurance company subsequently does not obtain the certificate of title to the vehicle due to denial of the insurance claim, lack of coverage on the insurance policy or lack of cooperation from the vehicle's owner.
3. Allows the salvage vehicle release notice to be delivered to the salvage auction dealer by a commercial delivery service, email or a proprietary electronic system that is accessible by both the insurance company and the dealer.
4. Requires the salvage auction dealer, on receipt of the salvage vehicle release notice, to deliver to the vehicle owner's or lienholder's address a letter by certified mail, or other commercially available delivery service that provides proof of delivery, informing the owner or lienholder:
a) that the salvage vehicle is available for pick up not later than 30 days after notice delivery; and
b) of any outstanding charges owed to the dealer.
5. Requires the salvage auction dealer, if the salvage vehicle is not picked up and the invoice is not paid within 14 days after delivery of the first notice to the property owner and lienholders, to send a second notice by certified mail, or other commercially available delivery service that provides proof of delivery, to the vehicle owner's or lienholder's address.
6. Stipulates that, if the salvage vehicle is not picked up and the invoice is not paid within 30 days after delivery of the first notice to the property owner and lienholders, the salvage vehicle is considered an abandoned vehicle and the vehicle's certificate of title is deemed to be assigned to the salvage auction dealer in possession of the vehicle.
7. Allows a salvage auction dealer to request, without surrendering the certificate of title, a salvage certificate of title or nonrepairable vehicle certificate of title for the salvage vehicle that is free and clear of all liens or encumbrances.
8. Requires the request for the salvage vehicle certificate of title that is free and clear of all liens or encumbrances to:
a) be on a form prescribed by ADOT;
b) include a copy of the first and second notices along with proof of delivery or, if the notices were undeliverable, include evidence that the notices were returned to the salvage auction dealer as undeliverable; and
c) be accompanied by a fee for a certificate of title that is free and clear of all liens or encumbrances in an amount determined by ADOT.
9. Requires ADOT, notwithstanding any lien against the salvage vehicle, to issue a certificate of title that is free and clear of all liens and encumbrances to the salvage auction dealer after satisfying the requirements included in the request for the certificate of title.
10. Defines terms.
11. Becomes effective on the general effective date.
House Action
TI 2/4/26 DPA 7-0-0-0
3rd Read 2/23/26 57-0-3
Prepared by Senate Research
March 11, 2026
MG/hk