STAND. COM. REP. NO.969

Honolulu, Hawaii

, 2003

RE: S.B. No. 482

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 482 entitled:

"A BILL FOR AN ACT RELATING TO THE MOTOR VEHICLE RENTAL INDUSTRY,"

begs leave to report as follows:

The purpose of this measure is to establish a fair procedure for the determination of diminution in value without the owner of U-drive vehicles having to go to court each time for such determination for each vehicle.

Testimony supporting this measure was received from Catrala-Hawaii and ANC Rental Corporation, who also proposed amendments to this measure. Testimony opposing this measure was received from the Department of Commerce and Consumer Affairs, State Farm Insurance Companies, and Hawaii Insurers Council.

Under present case law and in some cases statutory law, as acknowledged by the Department of Commerce and Consumer Affairs, an owner (U-drive owner or other type owner) of a damaged vehicle has the right to either have the vehicle repaired or collect the "diminution in value" if the vehicle is not repaired and the owner is not responsible for the damage. Oftentimes it is better for the owner not to have the vehicle repaired because a repaired vehicle later sold (with disclosure of the prior damage) often receives a reduced amount in compensation due to the damage. A car buyer typically does not want to buy a vehicle with prior damage when the buyer can buy a comparable vehicle with no prior damage.

The owners of U-drive vehicles are typically held to a higher standard of care and thus often seek not to have certain damaged vehicles repaired and put back into circulation for rental purposes. Instead of repairing the vehicles, the owners decide to collect diminution in value. U-drive owners are having difficulty in collecting "diminution in value" due in part to disputes relating to the computation of such values. These disputes appear to be primarily with insurance carriers. This measure seeks to establish a fair procedure for determining diminution in value without a U-drive company having to take each claim to court.

Your Committee finds that the auction process is typically used by the insurance companies and others to assist in the determination of the value of damaged vehicles. U-drive companies often use the same auction companies as insurance companies and others. This measure sets a procedure for the determination of diminution in value by use of the auction process with the requirement that the lessee (car renter, insurance representative, or other representative) must be afforded the opportunity to be present and/or participate in the auction process by telephone.

Your Committee has amended this measure by changing its effective date to July 1, 2099, to ensure further discussion on its merits.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 482, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 482, S.D. 1, and be placed on the calendar for Third Reading.

 

 

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,

____________________________

RON MENOR, Chair