U.S. motorists participating in the federal government’s Car Allowance Rebate System (CARS) program, popularly known as the ‘cash for clunkers’ initiative, must prove that the vehicle they want to trade-in has been insured continuously for at least the previous 12 months, according to the Insurance Information Institute (I.I.I.).
CARS rules state that the proof of insurance to be submitted to participating car dealers, can take one of three forms:
1. One or more insurance cards containing the make, model, model year and vehicle identification number (VIN) of the insured trade-in vehicle but only if, taken together, the cards display on their face a continuous one-year period of insurance coverage.
2. Insurance policy documents (e.g., declarations pages) showing the aforementioned information.
3. A signed letter, on insurance company letterhead, identifying the trade-in’s vehicle identification information (i.e., make, model, model year and VIN) and the period of continuous coverage, which must be for at least one year prior to the date of the trade-in.
“In addition, for each of the three options, the consumer must certify that the trade-in vehicle has been continuously insured for the requisite period,” the NHTSA rules state. The agency, a part of the U.S. Department of Transportation, consulted with the I.I.I., the American Insurance Association, the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America while developing the CARS program eligibility requirements.
“Auto insurers will play an important role facilitating a program which has the potential to remove from America’s roadways an estimated 250,000 gas-guzzlers, replacing them with newer, more fuel-efficient vehicles,” said Dr. Robert Hartwig, president of the I.I.I. and an economist. Hartwig added that car buyers should consult with their insurer or agent to make sure that their new vehicle is properly insured. “In many cases, the new vehicle will require coverages such as collision and comprehensive that may have been dropped on the older trade-in,” he noted.
The law that led to the creation of the CARS program stipulates that a car or truck is an eligible trade-in vehicle so long as it meets the following criteria:
- Manufactured less than 25 years ago
- Has a combined city/highway fuel economy of 18 miles per gallon or less
- Has been continuously insured and registered for the full year preceding the trade-in
President Obama signed into law the Consumer Assistance to Recycle and Save Act of 2009, which created CARS, on June 24 as a way to encourage Americans to help pay for the purchase or lease of a new, more fuel-efficient car or truck via credits of either $3,500 or $4,500 when trading in a less fuel-efficient car or truck.
As part of a CARS transaction the car dealer must submit to NHTSA the trade-in vehicle’s proof of insurance when requesting reimbursement from the federal government. The new vehicle must also have a manufacturer’s suggested retail price of $45,000 or less to be eligible for purchase or lease under the program. CARS will end on November 1, 2009, or earlier, if the $1 billion authorized for the initiative has been exhausted before that time.
For information on on how to save money when shopping for an auto insurance policy, go to the Auto Insurance section of the I.I.I. Web site.
The I.I.I. is a nonprofit, communications organization supported by the insurance industry.
Source: insurancenewsnet.com
