Erie Insurance total-loss offers in Wyoming: how the appraisal clause works

Wyoming regulates first-party automobile total losses through three layered authorities: the Unfair Claims Settlement Practices statute at Wyo. Stat. § 26-13-124, the prompt-payment and attorney-fee statute at § 26-15-124, and the salvage / total-loss definition at § 31-2-106(v). Under Wyo. Stat. § 26-13-124(a), a person engages in an unfair method of competition and an unfair and deceptive act or practice in the business of insurance if that person commits or performs with such frequency as to indicate a general business practice any of the following: (i) misrepresenting pertinent facts or insurance policy provisions; (iv) refusing to pay claims without conducting a reasonable investigation based upon all available information; (v) failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; (vi) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear; (vii) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds; and (xiv) failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement. Section 26-13-124 does not provide a private cause of action for unfair claim settlement practices, as the Tenth Circuit has read it (Viking Ins. Co. of Wisconsin v. Baize, No. 17-8074 (10th Cir. 2018), citing Julian v. New Hampshire Ins. Co., 694 F. Supp. 1530 (D. Wyo. 1988)). The Wyoming Supreme Court recognized first-party bad faith as an independent tort in McCullough v. Golden Rule Insurance Co., 789 P.2d 855 (Wyo. 1990), measured by "the objective standard whether the validity of the denied claim was not fairly debatable." Herrig v. Herrig, 844 P.2d 487 (Wyo. 1992), describes first-party bad faith as an insurer that "knowingly or recklessly denied a first-party claim for insurance benefits without having a reasonable basis for doing so," and holds that the duty of good faith and fair dealing runs only from the insurer to its insured. Wyo. Stat. § 26-15-124 supplies a direct statutory remedy: subsection (b) requires that "claims for benefits under a property or casualty insurance policy shall be rejected or accepted and paid by the insurer or its agent designated to receive those claims within forty-five (45) days after receipt of the claim and supporting bills." Subsection (c) provides that "in any actions or proceedings commenced against any insurance company on any insurance policy or certificate of any type or kind of insurance ... if it is determined that the company refuses to pay the full amount of a loss covered by the policy and that the refusal is unreasonable or without cause, any court in which judgment is rendered for a claimant may also award a reasonable sum as an attorney's fee and interest at ten percent (10%) per year." Wyo. Stat. § 31-2-106(a)(v) defines a "salvage vehicle" as one declared a total loss by the insurance company or, when an insurance company is not involved in the settlement of the claim, one where the cost of parts and labor to rebuild the motor vehicle to its pre-accident condition exceeds 75% of its actual retail cash value.