Or. Admin. Code § 836-080-0240 - Standards for Prompt and Fair Total Loss Settlements - Automobile Insurance
(1) When
an automobile insurance policy provides for the adjustment and settlement of
collision or comprehensive coverage total losses on the basis of actual cash
value or replacement with another comparable automobile or one of like kind and
quality, the insurer shall adjust and settle the claim as provided in this
rule.
(2) The insurer may elect to
offer a replacement automobile that is at least comparable to the insured
automobile. A replacement automobile is at least comparable if it is the same
make, is of the same or a newer year, is of a similar body style, has similar
options and mileage as the insured automobile, is in as good or better overall
condition and is available for inspection within a reasonable distance of the
insured's residence. The insurer shall pay all applicable taxes, license fees
and other fees incident to the transfer of evidence of ownership of the
automobile at no cost other than any deductible provided in the policy. The
offer and any rejection thereof must be documented in the claim file.
(3) The insurer may elect to make a cash
settlement, less any deductible provided in the policy, but including all
applicable taxes, license fees and other fees incident to transfer of ownership
of another comparable automobile. When an insurer makes a cash settlement, the
insurer shall furnish the insured copies of the information used by the insurer
for the purpose of determining the amount of the cash settlement. The insurer
shall comply with the provisions of the Uniform Electronic Transactions Act
(ORS 84.001 to
84.061) and ORS
84.070 if the insurer provides
this information electronically. If the information includes documentation of a
specific and comparable automobile that the insurer intends to rely upon to
preclude reopening the claim file under section (6) of this rule, the insurer
shall prominently disclose that intention. The value of the automobile for
purposes of a cash settlement may be based upon one of the following standards:
(a) A valuation obtained from a computerized
database source that produces statistically valid and fair market values for
automobiles, on the basis of the following criteria:
(A) The source shall produce values for at
least 85 percent of all makes and models of private passenger automobiles for
the last 15 model years;
(B) The
source shall rely upon values of vehicles that are currently available or were
available within the last 90 days from the date of loss for all vehicles and
shall apply appropriate standards of comparability;
(C) For all vehicles of five model years or
less of age, the values must be derived primarily from verifiable data or
inventory from licensed dealers;
(D) The source shall monitor the average
retail price of private passenger automobiles when there is insufficient data
or inventory from licensed dealers to ensure statistically valid market area
values;
(E) The source shall give
primary consideration to the values of vehicles in the local market area and
may consider data on vehicles outside the area; and
(F) The source shall produce fair market
values based on current data available from the area surrounding the location
where the insured vehicle was principally garaged or a necessary expansion of
parameters, such as time and area, to assure statistical validity.
(b) The actual cost to purchase
the automobile identified by the insurer as a replacement automobile that is at
least comparable to the insured automobile as determined pursuant to section
(2) of this rule, including all applicable taxes, license fees and other fees
incident to purchase of the automobile other than any deductible provided in
the policy; or
(c) An alternative
that deviates from the methods described in subsections (a) and (b) of this
section and is allowable under the policy, as long as documentation in the
claim file supports the deviation and gives particulars of the pre-loss
condition of the automobile. Any deductions from the cost, including deduction
for salvage if the salvage is retained by the claimant, must be measurable,
discernible, itemized and specified as to dollar amount and must be appropriate
in amount. The basis for a settlement under this subsection must be fully
explained in writing, supplied to the claimant and maintained in the claim
file.
(4) When an
insurer elects to make a cash settlement, the insurer shall provide the insured
or third-party claimant with the written statement set forth in Exhibit 1 of
this rule. The insurer shall comply with the provisions of the Uniform
Electronic Transactions Act (ORS
84.001 to
84.061) and 84.070 if the
insurer provides this written statement electronically.
(5) If an insurer and the insured or
third-party claimant are unable to agree on the value of the automobile, an
insurer shall pay the insured or third-party claimant the amount of the
automobile's value that is not in dispute as provided in section 3, chapter 65,
Oregon Laws 2009. An insurer is not obligated to pay the undisputed amount
until the insured or third-party owner of the automobile:
(a) Agrees to execute documents sufficient to
transfer ownership of the automobile to the insurer; and
(b) Authorizes the insurer, at the insurer's
expense, to move the automobile to a disclosed location selected by the
insurer, where the automobile will remain available for inspection and
evaluation for not fewer than 14 calendar days. After the expiration of the
14-day period, the insurer may proceed with the salvage sale of the
automobile.
(6) If the
insured notifies the insurer within 35 days of the receipt of the claim draft
that the insured cannot purchase an automobile for the market value as
determined in section (3) of this rule, the insurer shall reopen its claim file
and the following procedures shall apply:
(a)
The insurer may locate an automobile that is at least comparable to the insured
automobile as determined pursuant to section (2) of this rule, and that is
currently available for the market value determined by the insurer at the time
of settlement;
(b) The insurer may
either pay the insured the difference between the market value before
applicable deductions and the cost of the comparable automobile of like kind
and quality that the insured has located, or negotiate and effect the purchase
of the automobile for the insured;
(c) The insurer may elect to offer a
replacement automobile in accordance with the provisions set forth in section
(2) of this rule; or
(d) The
insurer may conclude the loss settlement in the manner provided in the
appraisal section of the insurance policy in force at the time of the loss. The
insurer shall reimburse the insured for the reasonable appraisal costs as
provided in ORS 742.466.
(7) The right of the insured to have a claim
reopened under section (6) of this rule applies only to first party claims of
the insured under the policy. The insurer is not required to take action under
section (6) of this rule if its documentation to the insured at the time of
settlement includes written notification of the availability and location of a
specified automobile that is at least comparable to the insured automobile as
determined pursuant to section (2) of this rule, that could have been purchased
for the market value determined by the insurer before applicable deductions.
The documentation shall include the vehicle identification number or another
specific vehicle identifier.
(8)
When the issue of liability is reasonably clear, an insurer shall not recommend
that a third party claimant make claim under the claimant's own insurance
policy solely for the recommending insurer to avoid paying a claim.
(9) An insurer shall not require unreasonable
travel of a claimant to inspect a replacement automobile, to obtain a repair
estimate or to have the automobile repaired at a repair shop.
(10) An insurer shall, upon a first party
claimant's request, include the claimant's deductible in the insurer's demands
under its subrogation rights. Subrogation recoveries shall be shared at least
on a proportionate basis with the first party claimant, unless the deductible
amount has been otherwise recovered by the claimant. No deduction for expenses
may be made from the deductible recovery unless an outside attorney is retained
to collect such recovery, in which case deduction may be made only for a pro
rata share of the cost of retaining the attorney.
(11) If an insurer or body shop prepares an
estimate of the cost of automobile repairs, the estimate shall be in the amount
for which the damage may reasonably be expected to be satisfactorily repaired.
If crash parts manufactured by anyone other than the original manufacturer are
to be supplied or installed, the estimate shall identify each such part in a
clearly understandable manner. The insurer or body shop shall give a copy of
the written estimate to the claimant.
(12) As provided in ORS
746.280, an insurer shall not
require that a particular person make the repairs to the first party claimant's
automobile as a condition for recovery under the claimant's policy. An insurer
shall not make such a requirement for the repair of a third party claimant's
automobile as a condition for claim payment.
(13) When the amount claimed as automobile
damage is reduced because of betterment or depreciation, all information used
as the basis for the reduction shall be contained in the insurer's claim file.
Such deductions shall be itemized and specified as to dollar amount and shall
be appropriate for the amount of betterment or depreciation.
(14) Sections (3), (4), (5), (8), and (12) of
this rule also apply to third party claimants.
Notes
Stat. Auth.: ORS 731.244
Stats. Implemented: ORS 742.466, 746.230, 746.240, 746.280 & 2009 OL Ch. 65, sec. 2 & 3
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