Nationwide total-loss offers in Nebraska: how the appraisal clause works

Nebraska regulates first-party automobile total losses through three layered authorities: the Unfair Claim Settlement Practices Act at Neb. Rev. Stat. § 44-1540, the implementing claim-handling regulation at 210 NAC 60, and the common-law tort of first-party bad faith recognized by the Nebraska Supreme Court in Braesch v. Union Insurance Co., 237 Neb. 44, 464 N.W.2d 769 (1991). Nebraska also provides for attorney's fees on the underlying contract claim under Neb. Rev. Stat. § 44-359. Importantly, Nebraska's Constitution prohibits punitive damages (Neb. Const. art. VII, § 5), so bad-faith recovery is limited to compensatory and consequential damages plus attorney's fees. Neb. Rev. Stat. § 44-1540 — Unfair Claim Settlement Practices. The statute defines acts that constitute unfair claim settlement practices when committed flagrantly and in conscious disregard of the Unfair Insurance Claims Settlement Practices Act or its rules, or with such frequency as to indicate a general business practice (§ 44-1539), including: misrepresenting pertinent facts or insurance policy provisions; failing to acknowledge with reasonable promptness pertinent communications about claims; 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 effectuate prompt, fair, and equitable settlements when liability is reasonably clear; and compelling insureds to institute litigation to recover amounts due. 210 NAC 60 — Unfair Property and Casualty Settlement Practices Rule. Section 009 of the rule sets standards for automobile claims but prescribes no total-loss valuation method. Under § 009.05, when the amount claimed is reduced because of betterment or depreciation, all information for the reduction must be contained in the claim file, and the deductions must be measurable, discernable, itemized, specified as to dollar amount, and appropriate for the amount of deductions. Neb. Rev. Stat. § 44-359 — Attorney's Fees. In any action against an insurance company in which the insured prevails, the court shall allow the plaintiff a reasonable sum as attorney's fees in addition to the amount recovered. § 44-359 does not require proof of bad faith — only that the insured prevails on the underlying contract claim — and the attorney's-fee award is the most practical financial lever in Nebraska first-party total-loss litigation. Braesch v. Union Insurance Co., 237 Neb. 44, 464 N.W.2d 769 (1991). The Nebraska Supreme Court recognized first-party bad faith as a tort separate from breach of contract, holding that an insurer breaches its duty of good faith and fair dealing when it lacks a reasonable basis for denying or delaying payment AND knows or recklessly disregards that lack of basis. Compensatory and consequential damages are available; punitive damages are NOT available in Nebraska as a matter of state constitutional law (Neb. Const. art. VII, § 5). Neb. Rev. Stat. § 60-171(7)(a) — Salvage-Vehicle Definition; 75% Threshold. The 75% repair-to-retail-value salvage-branding threshold for late-model vehicles lives in the "salvage vehicle" definition at § 60-171(7)(a), not at § 60-179. § 60-179 itself addresses prohibited acts in vehicle titling (title fraud) and is unrelated to the salvage threshold. Appraisal clauses — Rawlings v. Amco Ins. Co., 231 Neb. 874, 438 N.W.2d 769 (1989); Neb. Rev. Stat. § 25-2602.01(f)(4); Department of Insurance Guidance Document IGD-C11. In Nebraska, a clause in an insurance policy that purports to bind the parties to a nonjudicial determination of a future dispute over the amount of a loss is void and unenforceable, because a pre-dispute agreement to forgo the courts ousts them of jurisdiction (Rawlings, which concerned a homeowners policy's either-party appraisal clause). Neb. Rev. Stat. § 25-2602.01(b), enacted in 1997, validates written agreements to arbitrate future controversies, but subsection (f)(4) withholds that from "any agreement concerning or relating to an insurance policy" other than § 44-811 assessment-association bylaws and contracts between insurers. IGD-C11 (Oct. 20, 2022) applies Rawlings to fire policies and says policy language that allows both parties to agree to the appraisal process after a dispute arises is permitted. No section of Neb. Rev. Stat. chapters 44 or 60, and nothing in 210 NAC 60, requires or prescribes an appraisal clause in an auto policy. In Nebraska, then, neither the insured nor the insurer can use a policy's appraisal clause to force a binding appraisal; an appraisal goes forward when both agree to it after the dispute arises.