Liberty Mutual total-loss settlements in Delaware: how to negotiate a fair offer

Delaware regulates first-party automobile total losses through three layered authorities: the Unfair Trade Practices statute at 18 Del. C. § 2304 (the Delaware UCSPA, with no private right of action), the implementing claim-handling regulation at 18 Del. Admin. Code § 902 (Insurance Department Regulation 902 — Auto Insurance Coverage), and the contract-based bad-faith doctrine recognized in Tackett v. State Farm Fire & Casualty Insurance Co., 653 A.2d 254 (Del. 1995) and Pierce v. International Insurance Co., 671 A.2d 1361 (Del. 1996). Delaware requires adjusters and motor vehicle damage appraisers acting in Delaware to hold a Delaware Insurance Department license. SecondAppraisal Inc supplies market research and valuation analysis a Delaware-licensed appraiser may rely on rather than serving as the appraisal-clause appraiser of record. 18 Del. C. § 2304 — Unfair Insurance Practices. The statute defines acts that constitute unfair claim settlement practices when committed in conscious disregard of the policy or with such frequency as to indicate a general business practice, including: misrepresenting pertinent facts or insurance policy provisions; failing to acknowledge and act with reasonable promptness on claim communications; failing to adopt and implement reasonable standards for the prompt investigation of claims; refusing to pay claims without conducting a reasonable investigation; failing to affirm or deny coverage of claims within a reasonable time; not attempting in good faith to make prompt, fair, and equitable settlements when liability is reasonably clear; and compelling insureds to litigate. The Delaware Supreme Court has held § 2304 does not create a private right of action; enforcement is by the Insurance Department. 18 Del. Admin. Code § 902 — Auto Insurance Claims (Insurance Department Regulation 902). The regulation establishes specific standards for first-party automobile total-loss settlements: (a) Comparable vehicles. The insurer must determine actual cash value using two or more comparable automobiles available to the insured in the local market area, of like kind, quality, age, and mileage, with adjustments for differences itemized in writing. (b) Dealer quotations. The insurer may, in lieu of comparables, base settlement on two or more written quotations from licensed dealers in the local market area. (c) Statistically valid valuation source. The insurer may rely on a statistically valid local-market valuation source giving primary consideration to vehicles of the same year, make, and model, including all major options. (d) Adjustments. Condition, mileage, prior damage, or required-repair deductions must be measurable, discernible, itemized, and specified in dollar amounts in the claim file. Lump-sum adjustments without supporting documentation are non-compliant. (e) Sales tax and transfer fees. The insurer must include all applicable sales tax, title fees, and license fees incident to the transfer of evidence of ownership of a comparable, regardless of whether the insured purchases a replacement. (f) Right of Recourse. If the insured cannot purchase a comparable in the local market for the offered amount, the insurer must reopen the claim and either locate a comparable, pay the difference, offer a replacement, or invoke the policy's appraisal clause. Tackett v. State Farm Fire & Casualty Insurance Co., 653 A.2d 254 (Del. 1995) — Bad-Faith Breach of Contract. The Delaware Supreme Court declined to recognize a separate tort of first-party bad faith but held that an insurer's breach of the implied covenant of good faith and fair dealing in claim handling is a breach-of-contract claim with damages including consequential damages and, in cases of sufficiently egregious conduct, punitive damages. Pierce v. International Insurance Co., 671 A.2d 1361 (Del. 1996), confirmed that Tackett damages include emotional distress and consequential losses flowing from the breach. The "bad faith" standard requires conduct without "reasonable justification" — a deliberate or reckless disregard of the insurer's contractual duties. 21 Del. C. § 2517 — Salvage Title Threshold. A vehicle is "salvage" when the cost of repairs to its pre-loss condition exceeds 75% of its actual cash value before the loss. The 75% threshold sets the operational total-loss decision point in Delaware. Delaware Adjuster and Appraiser Licensing. Acting as an insurance adjuster or motor vehicle damage appraiser in Delaware requires a Delaware Insurance Department license under Title 18, with continuing-education and good-character requirements. SecondAppraisal Inc is not licensed in Delaware; the policyholder must retain a Delaware-licensed appraiser if invoking the policy's appraisal clause, and our market-research and valuation analysis serves as one of the foundations of that licensed appraiser's independent opinion.