STATE OF ILLINOIS
 
                                   OFFICE OF
 
                             THE SECRETARY OF STATE
 
 
WHEREAS, ARTICLES OF INCORPORATION OF INSURANCE AUTO AUCTIONS (ILLINOIS), INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
 
 
NOW THEREFORE, I, GEORGE H. RYAN, SECRETARY OF STATE OF THE STATE OF ILLINOIS,
BY VIRTUE OF THE POWERS VESTED IN ME BY LAW, DO HEREBY ISSUE THIS CERTIFICATE
AND ATTACH HERETO A COPY OF THE APPLICATION OF THE AFORESAID CORPORATION.
 
 
IN TESTIMONY WHEREOF, I HERETO SET MY HAND AND CAUSE TO BE AFFIXED THE GREAT
SEAL OF THE STATE OF ILLINOIS, AT THE CITY OF SPRINGFIELD, THIS 7TH DAY OF
AUGUST A.D. 1997 AND OF THE INDEPENDENCE OF THE UNITED STATES THE TWO HUNDRED
AND 22ND.
 
 
 
      [SEAL OF THE STATE OF ILLINOIS]
 
C-212.2
                                                  George H. Ryan
 
 
                                                  Secretary of State
 
 
RETURN TO BOX 408
ATTN:   JM
     ------------
 
 
<PAGE>   2
<TABLE>
<CAPTION>
<S><C>
 
   Form BCA-2.10              ARTICLES OF INCORPORATION
- ------------------------------------------------------------------------------------------
   (Rev. Jan. 1995)     THIS SPACE FOR USE BY SECRETARY OF STATE      SUBMIT IN DUPLICATE!
GEORGE H. RYAN                                                     -----------------------
SECRETARY OF STATE                    F I L E D                     THIS SPACE FOR USE BY
Department of Business Services                                      Secretary of State
Springfield, IL 62756                AUG 7  1997                   
- ----------------------                                             Date  8-7-97
Payment must be made by            GEORGE H. RYAN                  Franchise Tax   $ 25.00
certified check, cashier's       SECRETARY OF STATE                Filing Fee      $ 75.00
check, Illinois attorney's                                                         -------
check, Illinois C.P.A.'s                                           Approved:   ??? $100.00
check or money order, payable                                                     
to "Secretary of State."                                           
==========================================================================================
 
1.  CORPORATE NAME:    Insurance Auto Auctions (Illinois), Inc.
                     ---------------------------------------------------------------------
 
    --------------------------------------------------------------------------------------
    (The corporate name must contain the word "corporation", "company," "incorporated,"
    "limited" or an abbreviation thereof.)
 
==========================================================================================
 
2.  Initial Registered Agent:    Gaspare Ruggirello
                               -----------------------------------------------------------
                                   First Name         Middle Initial          Last Name
 
    Initial Registered Office:   850 East Algonquin Road
                               -----------------------------------------------------------
                                     Number               Street               Suite #
 
                                 Schaumburg     IL        60173                 Cook
                               -----------------------------------------------------------
                                      City               Zip Code              County
==========================================================================================
 
3.  Purpose or purposes for which the corporation is organized:
    (If not sufficient space to cover this point, add one or more sheets of this size.)
 
       The transaction of any or all lawful businesses for which corporations
       may be incorporated under the Illinois Business Corporation Act.
 
==========================================================================================
 
4.  Paragraph 1: Authorized Shares, Issued Shares and Consideration Received:
 
              Par  Value    Number of Shares     Number of Shares      Consideration to be
    Class      per Share       Authorized     Proposed to be Issued     Received Therefor
    --------------------------------------------------------------------------------------
    Common      $ NPV          20,000,000              1,000                  $1
    --------------------------------------------------------------------------------------
    Preferred     NPV           5,000,000                  0                   0            
    --------------------------------------------------------------------------------------
 
    --------------------------------------------------------------------------------------
 
    --------------------------------------------------------------------------------------
                                                                       TOTAL: $1
 
    Paragraph 2: The preferences, qualifications, limitations, restrictions and special or
    relative rights in respect of the shares of each class are:
    (If not sufficient space to cover this point, add one or more sheets of this size.)
 
       See attachment.
 
                                            (over)
 
 
    RETURN TO BOX 408                                                        EXPEDITED
    ATTN:    JM                                                             AUG 07 1997
         ------------                                                   SECRETARY OF STATE
 
</TABLE>
 
 
          
<PAGE>   3
ARTICLE 4, PARAGRAPH 2:
 
     a.   NUMBER OF AUTHORIZED SHARES.
 
          The Corporation shall have authority to issue a total of twenty-five
million (25,000,000) shares of capital stock, divided into classes as follows:
 
          (1)  Twenty million (20,000,000) shares of capital stock shall
constitute a separate and single class designated "Common Shares," which shall
have no par value and $.001 stated value.
 
          (2)  Five million (5,000,000) shares of capital stock shall constitute
a separate and single class designated "Preferred Shares," which shall have no
par value and $.001 stated value and may be issued in series, with all Preferred
Shares of the same series having identical rights, preferences and limitations.
 
     b.   COMMON SHARES.
 
          (1)  Dividend Rights.  Subject to the rights of any class of shares
(or series thereof) of the Corporation ranking, as to dividends, senior to
Common Shares, the holders of Common Shares shall be entitled to receive such
dividends, if any, as may be declared by the Board of Directors of the
Corporation from time to time and paid on Common Shares out of any assets of the
Corporation at the time legally available for the payment of dividends.
 
          (2)  Liquidation.  In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of the
Common Shares shall be entitled to share ratably in the assets of the
Corporation remaining after all distributions or payments shall have been made
to the holders of any class of shares (or series thereof) of the Corporation
ranking senior, as to liquidation rights, to Common Shares.
 
          The merger or share exchange of the Corporation with any other
corporation, or a sale, lease or conveyance of all or substantially all of its
assets, shall not be regarded as a liquidation, dissolution or winding up of the
Corporation within the meaning of this section.
 
          (3)  Voting.  Subject to the rights of any outstanding Preferred
Shares or as may be required by law, all voting power shall rest exclusively in
the holders of Common Shares. Each Common Share shall be entitled to one vote on
each matter submitted to a vote of the shareholders of the Corporation.
 
     c.   PREFERRED SHARES.
 
          Preferred Shares may be issued from time to time in one or more
series, in such amounts and for such consideration as the Board of Directors may
determine and with such
 
                                       1
<PAGE>   4
preferences, limitations and relative rights as shall be determined and stated
by the Board of Directors. The Board of Directors is hereby granted further
authority to determine such preferences, limitations and relative rights for
each such series of Preferred Shares by resolution prior to the issuance of
each such series. Without limiting the generality of the authority granted to
the Board of Directors herein, the Board of Directors shall have the power,
right and authority to determine the following preferences, limitations and
relative rights:
 
          (1)  Designation.  The designation of each series, which designation
shall be by distinguishing letter, number, title or combination thereof.
 
          (2)  Number.  The number of shares of any series to be issued.
 
          (3)  Dividend Source, Rate and Dates.  The source, rate and dates of
any dividends payable with respect to shares of any series; provided, however,
that no dividends shall be payable upon the Preferred Shares to the extent that
(A) the Corporation would not be able to pay its debts as they become due in the
usual course of business; or (B) the Corporation's total assets would be less
than the sum of its total liabilities plus (unless otherwise provided herein)
the amount that would be needed, if the Corporation were to be dissolved at the
time of the distribution, to satisfy the preferential rights upon dissolution of
the shareholders whose preferential rights are superior to those receiving the
distribution.
 
          (4)  Dividend Accumulations.  Whether any dividends which may be
payable with respect to shares of any series shall be cumulative; and, if they
shall be cumulative, then the dates from which such dividends shall start to
cumulate.
 
          (5)  Dividend Preferences.  The preference or preferences, if any, to
be accorded dividends payable with respect to shares of any series.
 
          (6)  Redemption.  The redemption rights and prices, if any, with
respect to shares of any series.
 
          (7)  Sinking Fund.  The terms and amount of any sinking fund provided
for the redemption of shares of any series.
 
          (8)  Rights of Purchase.  The rights, if any, of the Corporation to
purchase for retirement, other than by way of redemption, shares of any series,
and the terms and conditions of any such purchase rights.
 
          (9)  Conversion.  Whether or not the shares of any series shall be
convertible into Common Shares or into shares of any other series or number of
series or into any other security; and, if so, the conversion price or prices,
any adjustments thereof and/or any other terms and conditions upon which such
conversion may be effected.
 
                                       2
<PAGE>   5
         (10)  Liquidation.  The preference or preferences, if any, with respect
to shares of any series entitled to receive the net assets of the Corporation
upon liquidation, dissolution or winding up of the Corporation
 
         (11)  Voting.  The voting rights, if any, to which the holders of any
series of Preferred Shares may be entitled.
 
     d.  DISTRIBUTIONS TO SHAREHOLDERS.
 
         The Board of Directors may authorize, and the Corporation may make,
distributions to its shareholders if, after giving the distribution effect, (1)
the Corporation would be able to pay its debts as they become due in the usual
course of business and (2) the Corporation's total assets would be greater than
its total liabilities, without regard to any amount that would be needed, if the
Corporation were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the distribution.
 
ARTICLE 7:
 
     A.  INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS.
 
         The Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation), by reason of the
fact that he or she is or was a director or officer of the Corporation, or who
is or was serving at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, if such person acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The Corporation may indemnify any person who was or is a party, or is threatened
to be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation), by reason of the fact that he
or she is or was an employee or agent of the Corporation, or who is or was
serving at the request of the Corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, if such person acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order, settlement
or conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself,
 
                                       3
<PAGE>   6
create a presumption that the person did not act in good faith and in a manner
which he or she reasonably believed to be in or not opposed to the best
interests of the Corporation or, with respect to any criminal action or
proceeding, that the person had reasonable cause to believe that his or her
conduct was unlawful.
 
     B.   LIMITATION OF LIABILITY OF DIRECTORS.
 
          The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under Illinois law.
 
     C.   NO CUMULATIVE VOTING.
 
          In all elections for directors, cumulative voting by the shareholders
is hereby denied under all circumstances.
 
     D.   NO INFORMAL ACTION BY SHAREHOLDERS.
 
          Any action which may or must be taken by the shareholders must be
taken at any annual or special meeting of the shareholders and  may not be taken
by any consent in writing of the shareholders.