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

New York regulates first-party automobile total losses through four layered authorities: the Motor Vehicle Damage Appraiser certification regime at N.Y. Vehicle and Traffic Law § 398-d (administered by the DMV after a written examination), the Unfair Claim Settlement Practices statute at N.Y. Insurance Law § 2601 (no private right of action), the implementing closed-list claim-handling regulation at 11 NYCRR 216 (Insurance Department Regulation 64), and the consequential-damages doctrine for bad-faith breach of the implied covenant of good faith and fair dealing recognized in Bi-Economy Market, Inc. v. Harleysville Insurance Co., 10 N.Y.3d 187 (2008). New York requires Motor Vehicle Damage Appraiser certification to act as a vehicle damage appraiser; SecondAppraisal Inc supplies the market research and valuation analysis a New York-certified appraiser may rely on, rather than serving as the appraisal-clause appraiser of record. N.Y. Vehicle and Traffic Law § 398-d — Motor Vehicle Damage Appraiser Certification. The statute requires any person who appraises damage to motor vehicles for an insurer or insured in New York to hold a Motor Vehicle Damage Appraiser certificate issued by the New York Department of Motor Vehicles after passing a written examination. Acting as a vehicle damage appraiser without the certification is a violation subject to fines and certificate revocation. The certification requirement applies to the appraisal-clause appraiser the policyholder names under the policy. N.Y. Insurance Law § 2601 — Unfair Claim Settlement Practices. The statute prohibits acts that constitute unfair claim settlement practices when committed without just cause and with such frequency as to indicate a general business practice, including: knowingly misrepresenting pertinent facts or insurance policy provisions; failing to acknowledge with reasonable promptness pertinent communications; failing to adopt and implement reasonable standards for the prompt investigation of claims; not attempting in good faith to effectuate prompt, fair, and equitable settlements when liability has become reasonably clear; and compelling policyholders to institute suits to recover amounts due. The Court of Appeals held in Rocanova v. Equitable Life Assurance Society, 83 N.Y.2d 603 (1994), and New York University v. Continental Insurance Co., 87 N.Y.2d 308 (1995), that § 2601 does not create a private right of action; enforcement is by the New York State Department of Financial Services. 11 NYCRR 216 — Unfair Claims Settlement Practices and Claim Investigation Standards (Insurance Department Regulation 64). The regulation establishes specific standards for first-party automobile total-loss settlements: (216.6) Standards for prompt, fair and equitable settlements applicable to automobile insurance. (a) When an insurer settles a first-party automobile total-loss claim, the insurer must determine actual cash value using one of: (1) the cost of two or more comparable automobiles available to the insured in the local market area at the time of loss; (2) two or more written quotations from licensed dealers in the local market area; or (3) a fair-market-value source providing valid local-market values for vehicles of the same year, make, model, and major options. (b) The settlement amount must include all applicable New York sales tax, title fees, license fees, and other fees incident to the transfer of evidence of ownership of a comparable vehicle, regardless of whether the insured purchases a replacement. (c) Any deduction from the actual cash value because of vehicle condition or required repair must be measurable, discernible, itemized, and specified in dollar amounts in the claim file. Generic or lump-sum deductions are non-compliant. (d) Right of Recourse. If the insured cannot purchase a comparable automobile in the local market area for the offered amount within a reasonable time, the insurer must reopen the claim and either locate a comparable, pay the difference, offer a replacement, or invoke the policy's appraisal clause. (216.6) Time Standards. The insurer must acknowledge claim communications within 15 business days, complete the investigation within 30 business days of receipt of proof of loss, and either accept or deny the claim or provide a written explanation of the additional time needed. Documented violations of these time standards are central evidence in any subsequent bad-faith claim. Bi-Economy Market, Inc. v. Harleysville Insurance Co., 10 N.Y.3d 187 (2008) — Consequential Damages for Breach of Implied Covenant. The Court of Appeals held that an insurer's bad-faith breach of the implied covenant of good faith and fair dealing in claim handling supports recovery of consequential damages — losses foreseeably flowing from the breach beyond the policy limits or the disputed amount. Panasia Estates, Inc. v. Hudson Insurance Co., 10 N.Y.3d 200 (2008), confirmed the doctrine. Bi-Economy / Panasia damages can include rental-car costs, replacement-purchase price differential, lost wages from being unable to commute, and other documented consequential losses. The standard is that the loss must be foreseeable and reasonably calculable. N.Y. Vehicle and Traffic Law § 2113 — Salvage Title Threshold. A vehicle is "salvage" when an insurance company has determined it to be uneconomical to repair or pays a total-loss claim. New York supplements with a 75% repair-cost-to-pre-loss-value threshold for retitling under § 2113 — when repair cost exceeds 75% of pre-loss value, the vehicle must be branded as a salvage vehicle. New York requires Motor Vehicle Damage Appraiser certification to act as the policyholder's named appraiser under the policy's appraisal clause. SecondAppraisal Inc is not certified in New York; the policyholder must retain a New York DMV-certified Motor Vehicle Damage Appraiser if invoking the policy's appraisal clause, and our market-research and valuation analysis serves as one of the foundations of that certified appraiser's independent opinion.