W. Va. Code R. § 114-14-7

Current through Register Vol. XLI, No. 45, November 8, 2024

Section 114-14-7 - Standards For Prompt, Fair And Equitable Settlements Applicable To Automobile Insurance

7.1. Applicability. -- This section is applicable to claims arising under motor vehicle collision and comprehensive coverage. The provisions of section 6 of these rules are applicable to these claims except to the extent that such provisions are inconsistent with the specific provisions of this section.

7.2. Definition of terms. -- The following shall govern the construction of the terms used in this section:

a. "Agreed price" means the amount agreed to by the insurer and the insured, or their representatives, as to the reasonable cost to repair damages to the motor vehicle resulting from the loss, without considering any deductible or other deductions;

b. "Designated representative" means a person designated by the insured to represent him or her in negotiations with the insurer in an attempt to settle the claim. The designated representative may be a member of the insured's immediate family or any other person named by the insured who may legally act on his or her behalf and who so acts without compensation of any kind;

c. "Motor vehicle" has the meaning ascribed in subsection (b), section one, article one, chapter seventeen-a of the Code of West Virginia of 1931, as amended;

d. "Official used car guide" means a valuation source that has been approved by the Commissioner for setting the minimum value of a motor vehicle which is the subject of a total loss claim. In order to be approved by the Commissioner as an official used car guide, the valuation source must meet the following criteria:

1. All valuation sources must:

A. Produce statistically valid fair market values based on current data available primarily 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. Produce values for at least eighty-five percent (85%) of all makes and models of private passenger automobiles for the last fifteen (15) model years and include all major options. A sufficient number of vehicles shall be used for each year, make and model to represent a cross-section sufficient to determine fair market values;

C. Produce for examination by the Commissioner, at the time the request for approval is made or as soon thereafter as practicable, the source of the data in a manner that can be verified by the Commissioner;

D. Make available for examination by the Commissioner, at the time the request for approval is made or as soon thereafter as practicable, any contracts or agreements between the valuation source and insurers, which the valuation source may assert is a trade secret pursuant to W. Va. Code § 47-22-1(d); and

E. Produce for examination any other information determined by the Commissioner to be helpful or necessary in determining the statistical validity of the values produced by the valuation source, or otherwise bearing on the integrity of the valuation source, including the existence of and resolution of consumer complaints based upon total loss valuations performed by the source. If the information meets the definition of trade secret pursuant to W. Va. Code § 47-22-1(d), then the valuation source may make available for examination by the Commissioner, without filing the same, any information requested pursuant to this subparagraph. If the information meets the definition of trade secret pursuant to W. Va. Code § 47-22-1(d) and, after having been made available for examination by the Commissioner, the Commissioner determines that the information pertains to the existence of or resolution of consumer complaints, the valuation source shall propose a reasonable method for protection of the information.

2. A valuation source that is other than a valuation manual, including a computerized database, must meet the criteria set forth in subparagraphs A, B, C, D and E of paragraph one of this subdivision, and in addition must:

A. Give primary consideration to the values of vehicles in the local market area but if necessary to obtain a reasonable cross-section of the market, may consider vehicles in the next closest area;

B. Rely upon values of vehicles that are currently available or were available within ninety days from the date of loss for all vehicles and apply appropriate standards of comparability;

C. Rely upon values derived primarily from verifiable data or inventory from licensed dealers which have minimum sales of one hundred motor vehicles per year in the local market area, for vehicles of five model years or less of age;

D. 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; and

E. Clearly indicate and describe the condition at which the vehicle is being valued, if the valuation source uses several price ranges for the same model vehicle depending on the condition of the vehicle. Documentation of the condition of the insured vehicle must be made a part of the written valuation. Deductions made for the condition of the insured vehicle must be reasonably based on a physical attribute that has the effect of decreasing the vehicle's value.

e. "Substantially similar vehicle" means a motor vehicle of the same make, model, year and substantially the same condition, including all major options of the insured vehicle. Mileage may not exceed that of the insured vehicle by more than 4,000 miles unless mutually acceptable to both the insurer and the insured.

7.3. Adjustment of partial losses. -- The following subdivisions govern the conduct of insurers in the adjustment of partial losses:

a. Insurers shall include the insured's deductible, if any, in subrogation demands. Subrogation recoveries shall be shared on a proportionate basis with the insured, unless the deductible amount has been otherwise recovered. No deduction for expenses may be made from the deductible recovery unless an outside attorney is retained to collect such recovery. The deduction may then be for only a pro rata share of the allocated loss adjustment expense;

b. If an insurer prepares an estimate of the cost of the motor vehicle repairs, such estimate shall be in an amount for which it may be reasonably expected the damage can be satisfactorily repaired. The insurer shall give a copy of the estimate to the insured and may furnish to the insured the names of one or more conveniently located repair shops that will perform the repairs for the amount tendered in settlement of the claim;

c. If the insurer intends to exercise its rights to inspect damages prior to repair, it has seven (7) working days from the date of receipt of notice of loss to inspect the insured's damaged motor vehicle at a place and time reasonably convenient to the insured. In addition, negotiations shall commence and a good faith offer of settlement shall be made within the aforesaid seven (7) day period;

d. If the insured's motor vehicle is repaired at a repair shop recommended by the insurer, for a sum estimated by the insurer as the reasonable cost to repair the vehicle, the insurer shall, at no additional cost to the claimant and within a reasonable period of time, cause the damaged vehicle to be restored to the condition it was in prior to the loss if the repair shop it recommended does not so repair the damaged motor vehicle;

e. Deductions for betterment and/or depreciation are permitted only for parts normally subject to repair and replacement during the useful life of the insured motor vehicle. Deductions for betterment and/or depreciation are limited to an amount equal to the proportion that the expired life of the part to be repaired or replaced bears to the normal useful life of that part. Calculations for betterment, depreciation and normal useful life must be included in the insurer's claim file;

f. Deductions for previous damage or prior condition of the motor vehicle must be measurable, discernible, itemized and specified as to dollar amount, and such deductions must be detailed in the claim file;

g. The insurer must mail or hand deliver to the insured or his or her designated representative its proof of loss or payment within ten (10) working days after the insured has accepted the insurer's offer;

h. If the insurer does not perform its own physical inspection, it is nevertheless bound by all the applicable requirements of this regulation.

7.4. Adjustment of total losses. -- The following subdivisions govern the conduct of insurers in the adjustment of total losses:

a. If the insurer elects to make a cash settlement:

1. It must use the most recent version of an "Official Used Car Guide" approved by the Commissioner and uniformly and regularly used by the company, as a guide for setting the minimum value of the motor vehicle which is the subject of the claim. Any deviation downward from the guide's retail valuation must be supported by documentation that gives detailed information about the vehicle's condition, and any deductions must be measurable, discernible, itemized and specified concerning dollar amount, and they shall be appropriate in amount. This documentation must be maintained in the claim file;

2. If the retail value of the specific motor vehicle is not contained in the most recent version of an "Official Used Car Guide" approved by the Commissioner and which is used uniformly and regularly by the company, the company must secure dealer quotations on the retail value of similar vehicles and base the settlement upon them. The offer must enable the insured to purchase the substantially similar vehicle for the cash settlement and any deviation from this practice must be supported by documentation giving particular information about the motor vehicle's condition. The documentation and the source of the dealer quotations must be maintained in the claim file;

3. The company shall provide a reasonable written explanation to the concerned parties when cash settlement offers, as set forth in paragraphs (1) and (2) above are made. The explanation must specify the dollar amount of the base figure and identify the actual source. Any additions or subtractions from the base dollar figure must be identified and explained; and

4. In addition to any cash settlement value agreed to by the claimant, there must be added an amount equal to five percent (5%) of such cash settlement value, as reimbursement to the claimant for the excise tax imposed by the state.

b. If the insurer elects to replace the vehicle, the replacement vehicle must be an immediately available, substantially similar vehicle that is both furnished and paid for by the insurer, subject to the deductible, if any.

c. If the insured vehicle is a private passenger automobile of the current model year, meaning that it has not been superseded in the marketplace by an officially introduced succeeding model, the insurer shall utilize one of the following methods in the settlement of the loss, except where the method used would be detrimental to the interests of the insured as compared with utilization of the methods described in subdivisions a. and b. above:

1. The insurer shall pay to the insured the reasonable purchase price on the date of loss of a substantially similar vehicle, less any applicable deductible and an allowance for depreciation in accordance with an official used car guide which has been approved by the Commissioner and is used regularly by the insurer; or

2. The insurer shall furnish the insured with a substantially similar replacement vehicle, and charge the insured for any applicable deductible and for depreciation in accordance with the official used car guide.

d. If the insurer, in the process of adjusting a total loss, makes a deduction for the salvage value of the insured vehicle, the insurer must furnish the insured with the name and address of a salvage dealer who will purchase the salvage for the amount deducted.

e. All applicable provisions of subsection 7.3. of this section, "Adjustment of Partial Losses," also apply to the adjustment of total losses, except that the insurer is allowed an additional five (5) working days to comply with the requirements set out in subsection 7.3. of these rules. Any letter of explanation or rejection of any element of a claim shall contain the identity and claims processing address of the insurer, the insured's policy number and the claim number.

7.5. Unreasonable delay. -- If any element of a physical damage claim remains unresolved more than fifteen (15) working days from the date of receipt of proofs of loss by the insurer, the insurer shall provide the insured with a written explanation of the specific reasons for the delay in the claim settlement unless reasonable grounds exist to suspect fraud or arson. An updated letter of explanation shall be sent every thirty (30) calendar days thereafter until all elements of the claim are either honored or rejected.

7.6. Repair estimates. -- If an insurer requires that its insured obtain an estimate or estimates of vehicle damage, the reasonable charges, if any, of such estimates shall be borne by the insurer.

7.7. Notice of right to reimbursement for transportation expenses. -- In the event of the theft of the entire vehicle, it is the duty of the insurer at the time of notification of loss to advise the insured of his or her right under the policy to be reimbursed for transportation expenses. Such notification must be confirmed in writing immediately after receipt of notice of theft. All conditions and benefits related to this coverage as stated in the policy must be contained in the notification to the insured.

W. Va. Code R. § 114-14-7