An Illinois Department of Insurance, the insurance regulatory body for IL, representative told us that yes, it is state law that water damage / flood vehicles should be totaled out. He said it is a motor vehicle law and is followed very strictly in Illinois.
The portion of the Illinois Compiled Statutes (ILCS) that the IL Department of Insurance directed us to was 625 ILCS 5/3-117.1 which is titled "When junking certificates or salvage certificates must be obtained." Here in subsection b it states that an application for a salvage certificate shall be submitted to the Secretary of State in any of the following situations... then paragraph (5) says:
A vehicle that has been submerged in water to the point that rising water has reached over the door sill and has entered the passenger or trunk compartment is a "flood vehicle." A flood vehicle shall be considered to be salvage only if the vehicle has sustained damage so that the cost of repairing the damage, including labor, would be greater than 33 1/3% of the fair market value of the vehicle without that damage. The salvage certificate issued under this Section shall indicate the word "flood", and the word "flood" shall be conspicuously entered on subsequent titles for the vehicle. A person who possesses or acquires a flood vehicle that is not damaged in excess of 33 1/3% of its fair market value shall make application for title in accordance with Section 3-116 of this Code, designating the vehicle as "flood" in a manner prescribed by the Secretary of State. The certificate of title issued shall indicate the word "flood", and the word "flood" shall be conspicuously entered on subsequent titles for the vehicle.
So there are rules in Illinois for what is considered a flood car with a flood branded title and what is termed a flood vehicle that must have a salvage title and it depends upon how much water has been in the car and the damages in compare to the value of the car. If you would like to know more about the guidelines that auto insurance companies must follow in regards to totaling out cars with water or flood damage you can contact the IL Department of Insurance directly.
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