Current through February 24, 2025
(a) A person transacting a business of
insurance who participates in the investigation, adjustment, negotiation, or
settlement of a first-party or third-party motor vehicle claim shall
(1) apply one of the following settlement
methods if coverage provides for the adjustment of a motor vehicle total loss
on the basis of actual cash value or replacement with a vehicle of like kind
and quality:
(A) offer a comparable and
available replacement motor vehicle, with all applicable taxes, license fees,
destination or delivery charges, and other fees incident to transfer of
ownership of the motor vehicle paid, at no cost to the claimant other than the
deductible amount, if any, as stated in the coverage; the offer of a
replacement motor vehicle shall be made in writing ifrejected by the claimant;
or
(B) make a cash settlement based
upon the actual cost to purchase a comparable motor vehicle, including all
applicable taxes, license fees, destination or delivery charges, and other fees
incident to transfer of ownership, Jess the deductible amount, if any, as
stated in the coverage; the cost shall be determined by
(i) the cost of a comparable motor vehicle in
the local market area to the claimant, if that motor vehicle is available in
that area or was available during the last 90 days;
(ii) the average of two or more cost
quotations obtained for a comparable motor vehicle from two or more licensed
dealers located within the local market area, if a comparable motor vehicle is
not available in that area; if quotes from two or more licensed dealers are not
available from the local market area, the search area may be expanded to areas
surrounding the local market area in 25-mile increments until two quotes are
obtained;
(iii) a computerized
database valuation service that produces statistically valid fair market values
under (i) of this section;
(iv)
the average retail value of a comparable motor vehicle, ifthat value is
obtained from two industry sources published on a regular basis, at least once
every two months, that contain the average retail, wholesale, and finance
values for all makes and models for at least each of the last five model years,
as well as a listing for all major options; cost may be determined under this
subsubparagraph only if (i) - (iii) of this subparagraph do not identify any
comparable motor vehicles, and only with the consent of the claimant; or
(v) the cost of a comparable motor
vehicle using a basis that is allowable under the coverage, if supported by
documentation in the claim fi le and fully explained to the claimant; cost may
be determined under this subsubparagraph only if (i) - (iv) of this
subparagraph do not identify any comparable motor
vehicles;
(2)
provide to a claimant a reasonable written explanation of the valuation of
damages to the motor vehicle;
(3)
include the first-party claimant's deductible, if any, in a subrogation demand
unless the first-party claimant requests that it not be included or unless the
deductible has been otherwise recovered by the first-party claimant; no
deduction for expense may be made from any deductible recovered unless an
outside attorney or other outside expert witnesses have been retained and any
deduction is no more than a pro rata share of their cost less any attorney fees
and costs recovered; any recovery of prejudgement or postjudgement interest
shall be shared pro rata.
(b) Any person transacting a business of
insurance who participates in the investigation, adjustment, negotiation, or
settlement of a third-party motor vehicle claim
(2) may not recommend that a third-party
claimant make a claim under the claimant's own coverage in order to delay or
avoid paying a claim where liability and damages are reasonably
clear.
(c) A claimant
may not be required to travel unreasonably either to inspect a replacement
motor vehicle, obtain a repair estimate, or have the motor vehicle repaired at
a specific facility.
(d) Any
estimate or appraisal of the cost of repair of a motor vehicle must be in a
fair and appropriate amount that the claimant may reasonably be expected to be
charged for repairs at one or more conveniently located repair
facilities.
(e) If the amount
claimed as damage to the motor vehicle is reduced on the basis of betterment or
depreciation, the person adjusting or settling the claim shall itemize each
deduction and explain the basis for each reduction in writing to the
claimant.
(f) If a person adjusting
or settling a claim elects to have repaired a claimant's motor vehicle and
chooses a specific facility for the repairs, that person shall guarantee the
repairs and cause the damaged motor vehicle to be restored to its condition
before the loss, at no additional cost to the claimant, and cause the repairs
to be completed within a reasonable time.
(g) If the claimant's motor vehicle is
determined to be economically unrepairable and, therefore, a total loss, the
person adjusting or settling the claim may not reduce the salvage value of the
vehicle by charges for cleaning.
(h) An insurer may reduce the value of the
motor vehicle on the basis of betterment. Any deductions must be measurable, be
itemized, have specific dollar amounts, and be documented in the claim file.
Betterment deductions may be made only if the deductions
(1) reflect a measurable decrease in market
value attributable to the poorer condition of the vehicle or damage to the
vehicle that existed before the current claim;
(2) apply to parts normally subject to repair and replacement
during the useful life of the vehicle;
(3) reflect missing parts and the deductions
are not more than the replacement cost of the parts.
(i) A source for determining fair market
values under (a)(1)(B)(iii) of this section must meet the fo llowing criteria:
(1) the source must give primary
consideration to the values of comparable motor vehicles in the local market
area that are currently available or were available during the last 90 days;
(2) the source must produce values
applicable in this state for at least 85 percent of all makes and models for
the last 15 model years taking into account the values of all major options for
these vehicles;
(3) if at least
two comparable motor vehicles are not found in the local market area during the
last 90 days, the search may be expanded up to the last 180 days in 30-day
increments until two or more comparable motor vehicles are located;
(4) if at least two comparable motor vehicles
are not found in the local market area after expanding the search period as
provided under (3) of this subsection, the search area may be expanded to areas
surrounding the local market area in 25-mile increments for comparable motor
vehicles that are currently available or were available during the last 90
days; if at least two comparable motor vehicles are not found in the expanded
search area, the search area or time period in 30-day increments may be
expanded further with the agreement of the claimant.
(j) If the claimant notifies the insurer not
later than 60 days after receipt of the claim payment that the claimant cannot
purchase a comparable vehicle for the amount determined under (a)(1)(B) of this
section, the insurer shall, if the appraisal section of the policy has not been
exercised, reopen the insurer's claim file and determine a new settlement
amount using one of the fo llowing procedures:
(1) the insurer may locate a comparable motor
vehicle available through a licensed dealer for the value determined by the
insurer at the time of settlement, along with all applicable taxes, license
fees, destination or delivery charges, and other fees incident to transfer of
ownership of the motor vehicle, at no cost to the claimant other than the
deductible amount, if any, as stated in the coverage;
(2) if the claimant has located a comparable
motor vehicle of like kind and quality, the insurer may
(A) pay the difference between the value
determined by the insurer at the time of settlement and the cost of the
comparable motor vehicle; or
(B)
negotiate and effect the purchase of the comparable motor vehicle for the
claimant;
(3) for a
first-party claimant, the insurer may conclude the loss settlement using the
appraisal provisions of the policy.
(k) An insurer is not required to take action
under (j) of this section if
(1) the insurer
provided docwnentation to the claimant at the time of settlement 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 not
later than 10 working days after the date final payment is sent to the
claimant, lienholder, or both; or
(2) the appraisal section of the policy has
been exercised.
(l) If
comparable motor vehicles cannot be found under the procedures described in
this section, the insurer may consider vehicles by other manufacturers that
otherwise fall within the definition of "comparable motor vehicle" under
3
AAC 26.300 in the valuation processes described in
this section.
(m) This section
does not prohibit an insurer from issuing a stated policy insuring against
physical damage, where the amount of damages to be paid in the event of a total
loss is a specified dollar amount.
In 2010 the revisor of statutes, acting under
AS
01.05.031, redesignated former
AS
21.36.350 as
AS
21.36.125(c). As of Register
196 (January 2011), the regulations attorney made a conforming technical
revision under
AS
44.62.125(b)(6), to the
authority citation that follows 3 AAC 26.080, deleting the citation to former
AS
21.36.350 to reflect that the authority
citation already includes a citation to
AS
21.36.125, the section where material
formerly in
AS
21.36.350 was
relocated.
Authority:AS
21.06.090
AS
21.36.125
