Or. Admin. R. 836-080-0240

Current through Register Vol. 63, No. 5, May 1, 2024

Section 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.

Or. Admin. R. 836-080-0240

IC 2-1980, f. 5-8-80, ef. 6-1-80; IC 8-1986, f. & ef. 12-30-86; ID 20-1998, f. 12-2-98, cert. ef. 2-1-99; ID 2-2001(Temp), f. & cert. ef. 3-15-01 thru 9-7-01; Administrative correction 11-20-01; ID 12-2002, f. & cert. ef. 5-10-02; ID 14-2009, f. 12-23-09, cert. ef. 1-1-10

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 742.466, 746.230, 746.240, 746.280 & 2009 OL Ch. 65, sec. 2 & 3