The Oregon Division of Insurance had a bill filed on its behalf in the current legislative session that was designed to address its concerns over a significant number of consumer complaints related to dissatisfaction with the total loss experience. The result was the enactment of House Bill 2190, which has an effective date of January 1st, 2010. This bill provides additional clarity, transparency, and structure to the motor vehicle total loss claims process in that state. The enacted bill requires insurers to:
- Provide the insured or third-party owner written information concerning the methods used by the insurer to determine the value of the vehicle, and
- Pay any undisputed amount of the totaled vehicle in advance of the completion of negotiations regarding any undisputed amounts
The Division of Insurance is currently involved in the rulemaking process to develop the required disclosure form, to be used by insurers, which includes information about the total loss, vehicle valuation, and the duties of the insurer.
Effective August 21st, the State of Washington made some changes to automobile claims and total loss settlements. While some minor and non-substantive changes were made to Washington Administrative Code Sections 284-30-300 and 284-30-310, other existing sections were revised for clarification purposes and two new sections were added. The Office of the Insurance Commissioner created WAC 284-30-391, furthering transparency in the settlement of total loss vehicle claims, providing that unless an agreed value is reached, the insurer must adjust and settle vehicle total losses using the methods set forth in this new Code section. Furthermore, another new section, WAC 284-30-392, establishes required content in the insurer’s total loss vehicle valuation report. Among other requirements of this Section, the insurer’s total loss vehicle valuation report must include:
- All information collected during the initial inspection assessing the condition, equipment, and mileage of the loss vehicle;
- All information the insurer used to determine the actual cash value of the loss vehicle;
- A list of the comparable motor vehicles used by the insurer to arrive at the actual cash value.
Insurers writing motor vehicle policies in Oregon and Washington will want to determine the necessary changes in their claims processing systems to ensure compliance with both new and existing total loss requirements to minimize possible future market conduct concerns.
While Oregon and Washington took legislative and regulatory steps this year, Maryland and New Jersey also took action to reinforce correct and complete motor vehicle total loss procedures. New Jersey issued Bulletin 09-23 on July 23rd, which reminds insurers of existing sales tax obligation in total losses. The Department found that some insurers were not calculating and adding New Jersey state sales tax to the salvage retention deductions during the total loss claims settlement processes. Failure to include the tax amounts results in total loss claim valuations to insureds and third party claimants that include underpayments of the New Jersey sales tax related to the salvage retention deduction. The Maryland Insurance Administration conducted investigations on motor vehicle total loss processes, with multiple consent orders finalized earlier this year. The MIA determined that some insurers failed to pay or underpaid claimants the applicable tag transfer fees, title transfer fees and/or sales tax. These investigations led to fines and required restitution for many companies.
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