WAC 284.30.391 – Methods and standards of practice for settlement of total loss vehicle claims.
Unless an agreed value is reached, the insurer must adjust and settle vehicle total losses using the methods set forth in subsections (1) through (3) of this section. Subsections (4) through (6) of this section establish standards of practice for the settlement of total loss vehicle claims. If an agreed value or methodology is reached between the claimant and the insurer using an evaluation that varies from the methods described in subsections (1) through (3) of this section, the agreement must be documented in the claim file. The insurer must take reasonable steps to ensure that the agreed value is accurate and representative of the actual cash value of a comparable motor vehicle in the principally garaged area.
(1) Replacing the loss vehicle: The insurer may settle a total loss claim by offering to replace the loss vehicle with a comparable motor vehicle that is available for inspection within a reasonable distance from where the loss vehicle is principally garaged.
(2) Cash settlement: The insurer may settle a total loss claim by offering a cash settlement based on the actual cash value of a comparable motor vehicle, less any applicable deductible provided for in the policy.
(a) Only a vehicle identified as a comparable motor vehicle may be used to determine the actual cash value.
(b) The insurer must determine the actual cash value of the loss vehicle by using any one or more of the following methods:
(i) Comparable motor vehicle: The actual cash value of a comparable motor vehicle based on current data obtained in the area where the loss vehicle is principally garaged.
(ii) Licensed dealer quotes: Quotations for the cost of a comparable motor vehicle obtained from two or more licensed dealers within a reasonable distance of the principally garaged area not to exceed one hundred fifty miles (except where there are no licensed dealers having comparable motor vehicles within one hundred fifty miles).
(iii) Advertised data comparison: The actual cash value of two or more comparable motor vehicles advertised for sale in the local media if the advertisements meet the definition of current data as defined in WAC 284-30-320(4). The vehicles must be located within a reasonable distance of the principally garaged area not to exceed one hundred fifty miles.
(iv) Computerized source: The insurer may use a computerized source to establish a statistically valid actual cash value of the loss vehicle. The source used must meet all of the following criteria:
(A) The source’s data base must produce values for at least eighty-five percent of all makes and models for a minimum of fifteen years taking into account the values of all major options for such motor vehicles.
(B) The source must produce actual cash values based on current data within a reasonable distance of the principally garaged area, not to exceed one hundred fifty miles.
(C) The source must rely upon the actual cash value of comparable motor vehicles that are currently available or were available in the market place within ninety days prior to or after the date of loss.
(D) The source must provide a list of comparable motor vehicles used to determine the actual cash value. If more than thirty comparable motor vehicles are located, the insurer need list only thirty but may list more.
(v) Cash settlement search area: If none of the methods in subsection (2)(b)(i) through (iv) of this section produce a comparable motor vehicle to establish an actual cash value within a reasonable distance of the principally garaged area, the search area may be expanded in increasing circles of twenty-five mile increments, up to one hundred and fifty miles, until two or more comparable motor vehicles are located. If no comparable motor vehicles can be located within one hundred fifty miles, the search area may be expanded with the agreement of the first party claimant.
(3) Appraisal: If the first party claimant and the insurer fail to agree on the actual cash value of the loss vehicle and the insurance policy has an appraisal provision, either the insurer or the first party claimant may invoke the appraisal provision of the policy to resolve disputes concerning the actual cash value.
(4) Settlement requirements: When settling a total loss vehicle claim using methods in subsections (1) through (3) of this section, the insurer must:
(a) Communicate its settlement offer to the claimant by phone or in writing and information about this communication must be documented in the claim file, including the date, time, and name of the person to whom the offer was made.
(b) Base all offers on itemized and verifiable dollar amounts for vehicles that are currently available, or were available within ninety days of the date of loss, using appropriate deductions or additions for options, mileage or condition when determining comparability.
(c) Consider relevant information supplied by the claimant when determining appropriate deductions or additions.
(d) Provide a true and accurate copy of any “valuation report,” as described in WAC 284-30-392, if requested.
(e) As part of the settlement amount, include all applicable government taxes and fees that would have been incurred by the claimant if the claimant had purchased the loss vehicle immediately prior to the loss. These taxes and fees must be included in the settlement amount whether or not the claimant retains or subsequently transfers ownership of the loss vehicle.
(5) Settlement adjustments: Insurers may adjust a total loss settlement through the following methods only:
(a) The insurer may deduct from a first party claim the amount of another claim payment (including the applicable deductible) previously made to an insured for prior unrepaired damage to the same vehicle.
(b) Deductions other than those made pursuant to (a) of this subsection may be made for other unrepaired damage as long as the amount of deduction is no greater than the decrease in the actual cash value due to prior damage.
(c) If the claimant retains the total loss vehicle, the insurer may deduct the salvage value from the settlement amount, as described in subsection (4)(e) of this section. Upon a request by the claimant, the insurer must provide the name and address of a salvage entity or dismantler who will purchase the salvage for the amount deducted with no additional charge. This purchase option must remain available for at least thirty days after the settlement agreement is reached and the claimant must be advised that the salvage entity may not honor its offer if the condition of the salvage has changed.
(d) Any additions or deductions from the actual cash value must be explained to the claimant and must be itemized showing specific dollar amounts.
(6) Reopening a claim file:
(a) The insurer must reopen the claim file if within the first thirty-five days after the date final payment is sent to the first party claimant, lienholder, or both, the claimant is not able to purchase a comparable motor vehicle for the agreed amount but was able to locate, but did not purchase a comparable motor vehicle that costs more than the agreed settlement amount.
(b) If the claimant has satisfied (a) of this subsection, and if the appraisal section of the policy has not been utilized, the insurer must do one of the following:
(i) Locate a comparable motor vehicle that is currently available for the agreed settlement amount;
(ii) Pay the claimant the difference between the agreed settlement amount and the cost of the comparable motor vehicle;
(iii) Purchase the comparable motor vehicle for the claimant; or
(iv) Conclude the loss settlement in the manner provided in the appraisal section of the insurance policy in force at the time of the loss.
(c) The insurer is not required to reopen the claim file if:
(i) The claimant received written notification of the location of a specific comparable motor vehicle available for purchase for the agreed settlement amount and the claimant did not purchase this vehicle within five business days after the date final payment is sent to the claimant, lienholder, or both; or
(ii) The appraisal provision was previously exercised.
[Statutory Authority: RCW 48.02.060 and 48.30.010. 09-11-129 (Matter No. R 2008-07), § 284-30-391, filed 5/20/09, effective 8/21/09.]
The insurer’s total loss vehicle valuation report must include:
(1) All information collected during the initial inspection assessing the condition, equipment, and mileage of the loss vehicle;
(2) All information the insurer used to determine the actual cash value of the loss vehicle;
(3) A list of the comparable motor vehicles used by the insurer to arrive at the actual cash value. This list must include:
(a) The source of the information used;
(b) The date of the information;
(c) The contact information for the seller, the comparable motor vehicle’s vehicle identification number, or both;
(d) The seller’s asking price;
(e) The sold price, if available; and
(f) The location or contact information for each comparable motor vehicle at the time of the valuation.
(4) When the insurer uses a computerized source for determining statistically valid actual cash values after meeting the requirements of WAC 284-30-391 (2)(b)(iv):
(a) The source must provide a list of comparable motor vehicles used to determine the actual cash value. If more than thirty comparable motor vehicles are used, only thirty must be listed.
(b) Any supplemental information must be clearly identified with a separate heading.
(c) Any weighting of identified vehicles to arrive at an average must be documented and explained.
[Statutory Authority: RCW 48.02.060 and 48.30.010. 09-11-129 (Matter No. R 2008-07), § 284-30-392, filed 5/20/09, effective 8/21/09.][/bq]