Progressive total-loss offers in Virginia: how the appraisal clause works

Virginia regulates first-party automobile total losses through three layered authorities: the Unfair Claim Settlement Practices statute at Va. Code Ann. § 38.2-510, the implementing regulation at 14 VAC 5-400 (Rules Governing Unfair Claim Settlement Practices, with the auto-insurance-specific provisions at 14 VAC 5-400-80), and the costs-and-attorney-fees provision at Va. Code Ann. § 38.2-209. Va. Code Ann. § 38.2-510 — Unfair Claim Settlement Practices. The statute lists acts that no person may commit or perform with such frequency as to indicate a general business practice, including: misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; failing to acknowledge and act reasonably promptly upon communications with respect to claims; failing to adopt and implement reasonable standards for the prompt investigation of claims; refusing arbitrarily and unreasonably to pay claims; failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; not attempting in good faith to make prompt, fair and equitable settlements of claims in which liability has become reasonably clear; 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 failing to promptly settle claims where liability has become reasonably clear under one portion of the insurance policy coverage in order to influence settlements under other portions. § 38.2-510 does not create a private right of action; enforcement runs through the State Corporation Commission's Bureau of Insurance. 14 VAC 5-400 — Rules Governing Unfair Claim Settlement Practices. Virginia's claim-handling regulation establishes claim-acknowledgment timing and general claim-handling standards; the auto-insurance-specific provisions live at 14 VAC 5-400-80 ("Claims settlement standards applicable to automobile insurance"). Key 14 VAC 5-400-80 provisions: (A) Where liability is reasonably clear, the insurer must not recommend that a third-party claimant make a claim under its own policy solely to avoid paying a claim under the insured's policy. (B) The insurer must not require unreasonable travel for inspection, estimate, or repair. (C) The insurer must include the insured's deductible in subrogation demands; subrogation recoveries are shared proportionately with the insured. (D) The insurer's repair estimate must be reasonable; a total-loss valuation must be provided to the claimant upon request. (E) Betterment and depreciation deductions must be itemized and specified as to dollar amount. (F) Repair-shop standards apply when the insurer elects to repair. (G) Reasonable notice must be given before terminating storage payment. (H) Reasonable towing payments must be made. (I) Before ending transportation or rental reimbursement, the insurer must allow reasonable time for the claimant to receive payment for repairs or, after a total loss, for a replacement automobile. Virginia's 14 VAC 5-400 chapter does NOT contain a closed-list valuation framework (two-comparables / two-dealer-quotations / statistically-valid-source) or an express 30-day right-of-recourse provision. 14 VAC 5-400-80 was amended effective January 1, 2018. 14 VAC 5-400-50 — Acknowledgment of Pertinent Communications. (Note: this section is captioned and covers 15-calendar-day acknowledgment of claim notices and related timing requirements, NOT total-loss valuation methodology — the substantive auto-claim framework lives at 14 VAC 5-400-80 as set out above.) Va. Code Ann. § 38.2-209 — Costs and attorney fees in actions against insurers. In any civil case in which an insured individual sues the insurer to determine what coverage, if any, exists under the present policy or the extent to which the insurer is liable for compensating a covered loss, the insured is entitled to recover from the insurer costs and such reasonable attorney fees as the court may award — but only if the court determines that the insurer, not acting in good faith, has either denied coverage or failed or refused to make payment to the insured under the policy (§ 38.2-209(A)). A judge, not a jury, makes that determination (REVI, LLC v. Chicago Title Ins. Co., Record No. 141562 (Va. Sept. 17, 2015)). Va. Code Ann. § 46.2-1600 — Salvage vehicle definition. A "salvage vehicle" includes any late model vehicle acquired by an insurance company as part of the claims process (other than a stolen vehicle) or damaged to such an extent that its estimated cost of repair, excluding towing, storage, temporary replacement or rental vehicle charges and diminished value compensation, would exceed its actual cash value less its current salvage value, and any recovered stolen vehicle acquired by an insurance company as part of the claims process whose estimated cost of repair exceeds 75 percent of its actual cash value. "Current salvage value" is the salvage value determined by the insurer responsible for paying the claim or, if no insurance company is responsible, 25 percent of the actual cash value. A 75 percent figure also appears in the "rebuilt vehicle" definition (a late model vehicle repaired after an estimated cost of repair exceeding 75 percent of its actual cash value, excluding engine, transmission or drive axle repairs). A "late model vehicle" is the current model year and the five preceding model years, or any vehicle whose actual cash value was at least $10,000 before it was damaged.