b) Unreasonable Delays.
1) The period used in computing the "median
payment period" shall mean the period measured from the date of notification of
loss to the date of final payment or the rendering of the repaired automobile
to the insured or third party claimant.
2) An unreasonable delay to pay automobile
collision claims exists when the median payment period exceeds 40 calendar
days. If a first party physical damage automobile claim remains unresolved for
more than 40 calendar days from the date it is reported, the company shall
provide a reasonable written explanation for the delay to the insured. Notice
of Availability of the Department of Insurance shall accompany the written
explanation.
3) An unreasonable
delay to pay automobile property damage liability claims exists when a median
payment period exceeds 60 calendar days. If an automobile property damage
liability claim remains unresolved in excess of 60 calendar days from the date
it is reported, the company shall provide a reasonable written explanation for
the delay to the third party claimant. Notice of Availability of the Department
of Insurance shall accompany the written explanation.
4) Written explanations under subsections
(b)(2) and (3) shall be considered reasonable if they exhibit a rational basis
for the delay and are not frivolous.
c) Total Loss Vehicle Claims.
When the insured vehicle has been determined a total loss, and
the insurance policy provides for the adjustment and settlement of first party
vehicle claims on the basis of actual cash value or replacement, the company
shall establish a procedure to provide the insured with, at a minimum, the
information contained inExhibit A of this Part within 7 days after this
determination, and shall follow one of the following methods:
1) The company may elect to replace the
insured vehicle, providing that it is:
A)
Comparable in that it will be by the same manufacturer, same year, similar body
style, and similar options and price range as the insured vehicle and in as
good or better overall condition and available for inspection at a licensed
dealer within a reasonable distance of the insured's residence. The file must
contain a description of the replacement vehicle, including the vehicle
identification number and a schedule of options.
B) Replacement vehicles of the current model
plus the 3 previous model years must be purchased through licensed dealers.
This requirement may be waived in writing by the insured. The signed waiver
must be maintained in the file.
C)
Once the replacement vehicle is located, the insured shall be advised of the
location of the vehicle and the replacement value, including the applicable
taxes, license and transfer fees. In the event the insured elects a cash
settlement instead of such replacement vehicle, the company need pay only the
amount it would have otherwise paid on the replacement vehicle. As a condition
precedent to this method of settlement, the company must first offer the
replacement vehicle to the insured and the insured must reject the offer.
Evidence of such must be apparent in the file.
D) In the event that a replacement vehicle
meeting the requirements of subsection (c)(1)(A) is not available or the
insured rejects a replacement vehicle or the insured wants another available
vehicle substantially similar in value, the option to replace the insured
vehicle may be exercised provided the company has the insured's written waiver
in the claim file that the acceptance of another vehicle is of his or her own
free will and choice. The company need pay only the amount it would have
otherwise paid on the replacement vehicle, including the applicable taxes, and
transfer fees.
2) The
company may elect to pay a cash settlement. The company shall use one of the
following methodologies to determine the market value of the insured vehicle:
The cash settlement may be based upon the retail value of the vehicle as
determined from one of the following sources:
A) A source or sources which are published on
a regular basis, at least once every 2 months, and contain the average retail,
wholesale and finance value for all makes and models for at least each of the
last 5 model years, as well as a listing and price for all major options;
or
B) An electronically
computerized source or sources:
i) That
compute statistically valid retail values, including all major options and
equipment, and applicable allowances for mileage and condition, for at least
85% of all makes and models for at least each of the last 15 model
years;
ii) By which the retail
value so generated shall be based on data from the area immediately surrounding
the location where the insured vehicle was principally garaged and such value
shall be based upon data compiled on at least
1.5 million passenger
vehicles;
iii) That compile,
maintain and provide, upon request, a record of valuations and monthly
summaries of the average retail value, option value, and mileage for each
general metropolitan area for the preceding 24 month period.
C) The settlement may be based
upon an electronically computerized service. Such settlement must include at
least 2 currently available vehicles from licensed dealers in Illinois or 2
vehicles that have been sold by licensed dealers in Illinois, one of which was
sold within the past 30 days and one of which was sold within the past 90 days.
The location of the licensed dealer for each available or recently sold vehicle
shall be within 50 miles of the general metropolitan area where the data is
gathered. The name and location of the licensed dealers, as well as the vehicle
identification numbers (VINs), shall be maintained in the claim file. If the
electronically computerized service does not include a sufficient number of
vehicles to satisfy the requirements of this subsection (c)(2)(C), the service
may provide an average from at least 2 published sources that comply with
subsection (c)(2)(A).
D) If the
insured vehicle is not quoted in the source or sources used by the company, the
company shall then base the settlement upon at least two written dealers'
quotations. The company shall furnish the names and locations of the dealers
used to determine the market value to the insured, and a copy of the dealers'
quotations.
E) In subsection
(c)(2)(A), (B), (C) and (D), the claim file shall contain documentation of how
the market value of the insured automobile was determined.
F) Right of Recourse - If within 30 days
after the receipt of the claim draft, the insured cannot purchase a comparable
vehicle in excess of such market value, the company will reopen its claim file
and the following procedure(s) shall apply:
i) The company may locate a comparable
vehicle by the same manufacturer, same year, similar body style and similar
options and price range for the insured for the market value determined by the
company at the time of settlement. Any such vehicle must be available through
licensed dealers; or
ii) The
company shall either pay the insured the difference between the market value
before applicable deductions and the cost of the comparable vehicle of like
kind and quality which the insured has located, or negotiate and effect the
purchase of this vehicle for the insured; or
iii) The company may elect to offer a
replacement in accordance with the provisions set forth in subsection (c)(1);
or
iv) The company may conclude the
loss settlement as provided for under the appraisal section of the insurance
contract in force at the time of loss. This appraisal shall be considered as
binding against both parties, but shall not preclude or waive any other rights
either party has under the insurance contract or at common law.
v) The company is not required to take action
under this subsection (c)(2)(F) if its documentation to the insured at the time
of settlement included written notification of the availability and location of
a specified and comparable vehicle of the same manufacturer, same year, similar
body style and similar options in as good or better condition as the total loss
vehicle which could have been purchased for the market value determined by the
company before applicable deductions. The documentation shall include the
vehicle identification number.
3) Provisions applicable to subsections
(c)(1) and (c)(2).
A) If a replacement
vehicle is provided, the company is required to pay the applicable sales tax
and transfer and title fees.
i) If a cash
settlement is provided, and if within 30 days after the receipt of the
settlement by the insured, the insured has purchased or leased a vehicle, the
company is required to reimburse the insured for the applicable sales taxes and
transfer and title fees incurred on account of the purchase or lease of the
vehicle, but not exceeding the amount payable on account of the value of the
total loss vehicle. If the insured purchases or leases a vehicle with a market
value less than the amount of the settlement, then the company is required to
reimburse only the amount of the applicable sales tax and transfer and title
fees incurred by the insured. If the insured cannot substantiate such purchase
and the payment of such taxes and fees, by submission to the company of
appropriate documentation within 33 days after the receipt of settlement, the
company shall not be required to reimburse the insured for the sales taxes or
transfer or title fees. In lieu of this reimbursement procedure, the company
may directly pay the required amounts of sales taxes and transfer and title
fees to the insured at the time of settlement. With respect to leased vehicles,
sales taxes and transfer and title fees shall be deemed to be incurred by the
insured at the time the lease is entered into, but only if such sales taxes and
transfer and title fees are included in the cost of the lease or are paid
directly by the insured.
ii) Any
form required by the company for applying for the reimbursement must be
furnished by the company with either the notice or at the time of
settlement.
B)
Deductions of the kind commonly referred to as "get ready to go" and "dealer
prep", or dealer preparation, charges are prohibited.
d) Practices Concerning Travel,
Loss of Use, Storage/Towing and Betterment, Replacement Crash Parts and
Automobile Repairs.
1) Unreasonable Travel.
A) The company shall not require the insured
or claimant to travel unreasonably to inspect a replacement vehicle, nor shall
the company require the insured or claimant to locate a replacement
vehicle.
B) The company shall not
require the insured or claimant to travel unreasonably either to obtain a
repair estimate or to have the vehicle repaired at a specific repair shop that
is recommended by the company.
C)
The Department will consider availability and cost consideration in determining
reasonable travel requirements.
2) Loss of Use. In automobile property damage
liability claims in which liability is reasonably clear, the company shall pay
for the reasonable and necessary costs, in direct proportion to the extent of
its liability, incurred in the rental of another automobile provided that the
loss of use claim is submitted and substantiated. In those cases where the
company pays a flat rental amount per day, week or month, it must disclose to
the claimant where the claimant can obtain a vehicle for the amount of its
payment.
3) Storage and Towing. The
company shall provide reasonable notice to an insured prior to termination of
payment for automobile storage charges and document such notice in the claim
file. Reasonable notice shall constitute sufficient notice to the insured to
allow them to remove the vehicle from storage prior to the termination of
payment. Unless the company has provided an insured with the name of a specific
towing company prior to the insured's use of another towing company, the
company shall pay any and all reasonable towing charges irrespective of the
towing company used by the insured. A company shall make no advance charge
deductions for storage and towing charges unless excessive charges have
resulted from the insured's own actions. The company shall itemize each advance
charge deduction and maintain in the claim file documentation of the reasons
and dollar amounts involved in each deduction. Any determination of reasonable
towing charges shall consider policy coverage as well as the cost and distances
involved in each claim.
4)
Betterment deductions are allowable only if:
A) The deductions:
i) Reflect a measurable decrease in market
value attributable to the poorer condition of, or prior damage to, the insured
vehicle;
ii) Are for prior wear and
tear, missing parts and rust damage that is reflective of the general overall
condition of the vehicle considering its age, any such deductions for this type
of damage may not exceed $500; and
iii) Are measurable, itemized, specified as
to dollar amount and documented in the claim file; and
B) The company does not require the insured
or claimant to supply parts for replacement.
5) Replacement Crash Parts.
A) Purpose.
The purpose of this subsection (d)(5) is to set forth standards
for the prompt, fair and equitable settlements applicable to automobile
insurance with regard to the use of replacement crash parts. It is intended to
regulate the use of replacement crash parts in automobile damage repairs which
insurers pay for on their insured's vehicle. It also requires that all
replacement crash parts, as defined in this Section, be identified and be of
the same quality as the original part.
B) Identification.
All replacement crash parts, which are subject to this Section
and manufactured after March 17, 1986, shall carry sufficient permanent
non-removable identification so as to identify its manufacturer. Such
identification shall be accessible to the extent possible after
installation.
C) Like Kind
and Quality.
No insurer shall require the use of replacement crash parts in
the repair of an automobile unless the replacement crash part is at least equal
in like kind and quality to the original part in terms of fit, quality and
performance. Insurers specifying the use of replacement crash parts shall
consider the cost of any modifications which may become necessary when making
the repair.
6)
Vehicle Repairs.
If partial losses are settled on the basis of a written
estimate prepared by or for the company, the company shall supply, upon request
of the insured, a copy of the estimate upon which the settlement is based. The
estimate prepared by or for the company shall be reasonable, in accordance with
applicable policy provisions, and of an amount which will allow for repairs to
be made in a workmanlike manner. If the insured subsequently claims, based upon
a written estimate which he obtains, that necessary repairs will exceed the
written estimate prepared by or for the company, the company shall review and
respond promptly to the insured and provide the insured with the name of a
repair shop that will make the repairs in a workmanlike manner. Failure of the
company to so inform the insured of the name of such a repair shop shall
require the company to provide written notice to the insured that any and all
reasonable costs incurred for repair or replacement related to the partial loss
in excess of the company's estimate will be reimbursed by the company. The
company shall maintain documentation of all such communications.
7) Required Practices - Fire and
Extended Coverage Claims.
A) An unreasonable
delay to pay claims on policies of fire and extended coverage insurance, as
defined in Section 143.13 of the Code [215
ILCS 5/143.13 ], exists when a median payment period
exceeds 40 calendar days.
B) If a
claim on a policy of fire and extended coverage insurance, as defined in
Section 143.13 of the Code [215
ILCS 5/143.13 ], remains unresolved for more than 75
calendar days from the date it is reported, or 25 calendar days after receipt
of proof of loss, whichever is less, the company shall provide a reasonable
written explanation for the delay to the insured. Notice of Availability of the
Department of Insurance shall accompany the written explanation to the
insured.
C) If partial losses are
settled on the basis of a written estimate prepared by or for the company, the
company shall supply upon request of the insured, a copy of the estimate upon
which the settlement is based. The estimate prepared by or for the company
shall be reasonable, in accordance with applicable policy provisions, and of an
amount which will allow for repairs to be made in a workmanlike manner. If the
insured subsequently claims, based upon a written estimate which he obtains,
that necessary repairs will exceed the written estimate prepared by or for the
company, the company shall review and respond promptly in writing to the
insured in regard to his written estimate and provide the insured with the name
of a repair shop or contractor that will make the repairs in a workmanlike
manner. Failure of the company to so inform the insured of the name of a
contractor shall require the company to provide written notice to the insured
that any and all reasonable costs incurred for repair or replacement related to
the partial loss in excess of the company's estimate will be reimbursed by the
company.
8) Actual Cash
Value Losses.
A) When the insurance policy
provides for the adjustment and settlement of losses on an actual cash value
basis on residential fire and extended coverage as defined in Section 143.13 of
the Code [215 ILCS
5/143.1 3], the company shall determine actual cash
value, except for instances in which the insured's interest is limited as set
forth in subsection (d)(8)(B), as follows: replacement cost of property at time
of loss less depreciation, if any. Upon the insured's request, the company
shall provide a copy of the claim file worksheet(s) detailing any and all
deductions for depreciation, including, but not necessarily limited to, the
age, condition, and expected life of the property.
B) In cases in which the insured's interest
is limited because the property has nominal or no economic value, or a value
disproportionate to replacement cost less depreciation, the determination of
actual cash value as set forth in subsection (d)(8)(A) is not required. In such
cases, the company shall provide, upon the insured's request, a written
explanation of the basis for limiting the amount of recovery along with the
amount payable under the policy.
C)
When the period within which the insured may bring suit under a residential
fire and extended coverage policy is tolled in accordance with Section 143.1 of
the Code [215 ILCS
5/143.1 ], the company, at the time it denies the
claim, in whole or in part, shall advise the insured in writing of the number
of days the period was tolled, and how many days are left before the expiration
of the time to bring suit.