10-K/A

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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              --------------------

                                    FORM 10-K

                                 AMENDMENT NO. 1

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 26, 2004

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                         Commission File Number 0-19594

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                          INSURANCE AUTO AUCTIONS, INC.
             (Exact name of Registrant as specified in its charter)

             ILLINOIS                                     95-3790111
   (State or other jurisdiction of                     (I.R.S. Employer
   incorporation or organization)                   Identification Number)

                    TWO WESTBROOK CORPORATE CENTER, SUITE 500
                           WESTCHESTER, ILLINOIS 60154
                                 (708) 492-7000

  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

                              --------------------

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001
par value

      Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X] No [ ]

      The aggregate market value of Registrant's voting stock, based on the
closing price of the Registrant's Common Stock as of June 27, 2004, was
approximately $83,549,809. For purposes of this calculation, the Registrant's
directors, executive officers and 5% shareholders have been assumed to be
affiliates. As of March 1, 2005, the Registrant had outstanding 11,853,123
shares of common stock, $0.001 par value.

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INTRODUCTORY NOTE

      The Annual Report on Form 10-K for Insurance Auto Auctions, Inc. filed on
March 14, 2005 is hereby amended to replace Item 9A, as originally filed and to
include the enclosed exhibits. No other changes have been made to the 10-K.

ITEM 9A. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

      We conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") as of the end of the period covered by this Form 10-K. The
controls evaluation was conducted under the oversight of our Audit Committee,
and with the participation of management, including our Chief Executive Officer
and Chief Financial Officer. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that our disclosure controls
and procedures were effective to provide reasonable assurance that (i) the
information required to be disclosed by us in this Annual Report on Form 10-K
was recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and (ii) information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
accumulated and communicated to our management, including our principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

      Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as that term is defined in Exchange
Act Rules 13a-15(f) and 15d-15(f) under the Securities Act of 1934.

      Under the supervision and with the participation of our management,
including the Chief Executive Officer and Chief Financial Officer, we conducted
an evaluation of the effectiveness of our internal control over financial
reporting as of December 26, 2004 based on the criteria related to internal
control over financial reporting described in "Internal Control -- Integrated
Framework" issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on our evaluation, management concluded that our internal
control over financial reporting was effective as of December 26, 2004.

      KPMG LLP, the independent registered public accounting firm that audited
the financial statements included in the Company's Annual Report on Form 10-K,
has issued an attestation report, which appears below, on management's
assessment of the Company's internal control over financial reporting.

                                       2


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER
FINANCIAL REPORTING

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Insurance Auto Auctions, Inc.:

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control over Financial Reporting, that Insurance
Auto Auctions, Inc. and subsidiaries (the Company) maintained effective internal
control over financial reporting as of December 26, 2004, based on criteria
established in Internal Control -- Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). The Company's
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion on
management's assessment and an opinion on the effectiveness of the Company's
internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, management's assessment that the Company maintained effective
internal control over financial reporting as of December 26, 2004, is fairly
stated, in all material respects, based on criteria established in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Also, in our opinion, the
Company maintained, in all material respects, effective internal control over
financial reporting as of December 26, 2004, based on criteria established in
Internal Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).

                                       3


We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
the Company as of December 26, 2004 and December 28, 2003, and the related
consolidated income statements, statements of shareholders' equity, and cash
flows for each of the fiscal years in the three-year period ended December 26,
2004, and our report dated March 11, 2005 expressed an unqualified opinion on
those consolidated financial statements.

/s/ KPMG LLP

Chicago, Illinois
April 15, 2005

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

      During 2004, we made numerous changes to our controls and procedures as
part of our ongoing monitoring and improvement of our controls. However, none of
these changes has materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

INHERENT LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS

      Our management, including our Chief Executive Officer and Chief Financial
Officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent or detect all errors and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that misstatements due to
error or fraud will not occur or that all control issues and instances of fraud,
if any, within the Company have been detected.

      These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple
error or mistake. Controls can also be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of
the controls. The design of any system of controls is based in part on certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions. Projections of any evaluation of control effectiveness to
future periods are subject to risks. Over time, controls may become inadequate
because of changes in conditions or deterioration in the degree of compliance
with policies or procedures.

                                       4


                                   SIGNATURES

Pursuant to the requirements Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                   INSURANCE AUTO AUCTIONS, INC.

                                   By:         /s/ Thomas C. O'Brien
                                      ------------------------------------------
                                        President and Chief Executive Officer
Date: April 19, 2005

                                       5


                                INDEX TO EXHIBITS

Exhibit No.

23          Consent of Independent Registered Public Accounting Firm

31.1        Certification of Thomas C. O'Brien, Chief Executive Officer,
            pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2        Certification of Scott P. Pettit, Chief Financial Officer, pursuant
            to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1        Certification of Thomas C. O'Brien, Chief Executive Officer,
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2        Certification of Scott P. Pettit, Chief Financial Officer, pursuant
            to Section 906 of the Sarbanes-Oxley Act of 2002.

                                       6

EX-23

                                                                      EXHIBIT 23

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Insurance Auto Auctions, Inc.:

We consent to incorporation by reference in the registration statements (No.
333-48805 and 333-117076) on Form S-8 of Insurance Auto Auctions, Inc. and
subsidiaries of our report dated April 15, 2005 with respect to management's
assessment of the effectiveness of internal control over financial reporting as
of December 26, 2004 and the effectiveness of internal control over financial
reporting as of December 26, 2004, which report appears in the December 26, 2004
annual report on Form 10-K/A of Insurance Auto Auctions, Inc.

/s/ KPMG LLP
Chicago, Illinois
April 15, 2005

EX-31.1

                                                                    Exhibit 31.1

                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002
  (PURSUANT TO RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED)

I, Thomas C. O'Brien, certify that:

1.    I have reviewed this report on Form 10-K of Insurance Auto Auctions, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13a-15(f) and 15d-15(f)), for the registrant and have:

      a)    Designed such disclosure controls and procedures or caused such
            disclosure controls and procedures to be designed under our
            supervision to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      b)    Designed such internal control over financial reporting, or caused
            such internal control over financial reporting to be designed under
            our supervision, to provide reasonable assurance regarding the
            reliability of financial reporting and the preparation of financial
            statements for external purposes in accordance with generally
            accepted accounting principles;

      c)    Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      d)    Disclosed in this report any changes in the registrant's internal
            control over financial reporting that occurred during the
            registrant's fourth fiscal quarter that has materially affected, or
            is reasonably likely to materially affect, the registrant's internal
            control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial
      reporting, to the registrant's auditors and the audit committee of the
      registrant's board of directors:

      a)    All significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b)    Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls over financial reporting.

Date:  April 19, 2005                 /s/ Thomas C. O'Brien
                                      ------------------------------------------
                                      Thomas C. O'Brien, Chief Executive Officer

EX-31.2

                                                                    Exhibit 31.2

                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002
  (PURSUANT TO RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED)

I, Scott P. Pettit, certify that:

1.    I have reviewed this report on Form 10-K of Insurance Auto Auctions, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13a-15(f) and 15d-15(f)), for the registrant and have:

      a)    Designed such disclosure controls and procedures or caused such
            disclosure controls and procedures to be designed under our
            supervision to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      b)    Designed such internal control over financial reporting, or caused
            such internal control over financial reporting to be designed under
            our supervision, to provide reasonable assurance regarding the
            reliability of financial reporting and the preparation of financial
            statements for external purposes in accordance with generally
            accepted accounting principles;

      c)    Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      d)    Disclosed in this report any changes in the registrant's internal
            control over financial reporting that occurred during the
            registrant's fourth fiscal quarter that has materially affected, or
            is reasonably likely to materially affect, the registrant's internal
            control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial
      reporting, to the registrant's auditors and the audit committee of the
      registrant's board of directors:

      a)    All significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b)    Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls over financial reporting.

Date: April 19, 2005                  /s/ Scott P. Pettit
                                      ------------------------------------------
                                      Scott P. Pettit, Chief Financial Officer

EX-32.1

                                                                    Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Annual Report on Form 10-K of Insurance Auto
Auctions, Inc. (the "Company") for the annual period ended December 26, 2004 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Thomas C. O'Brien, Chief Executive Officer of the Company,
certify, pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

      (1)   the Report fully complies with the requirements of section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   the information contained in the Report fairly presents, in all
            material respects, the financial condition and results of operations
            of the Company.

Date:  April 19, 2005

                                      /s/ Thomas C. O'Brien
                                      ------------------------------------------
                                      Thomas C. O'Brien, Chief Executive Officer

      This certification accompanies this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

      A signed original of this written statement required by Section 906 has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.

EX-32.2

                                                                    Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Annual Report on Form 10-K of Insurance Auto
Auctions, Inc. (the "Company") for the annual period ended December 26, 2004 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Scott P. Pettit, Chief Financial Officer of the Company, certify,
pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

      (1)   the Report fully complies with the requirements of section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   the information contained in the Report fairly presents, in all
            material respects, the financial condition and results of operations
            of the Company.

Date: April 19, 2005

                                      /s/ Scott P. Pettit
                                      ------------------------------------------
                                      Scott P. Pettit, Chief Financial Officer

      This certification accompanies this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

      A signed original of this written statement required by Section 906 has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.