Nationwide total-loss settlements in Illinois: how to negotiate a fair offer

Illinois regulates first-party automobile total losses through two layered authorities: the Illinois Insurance Code at 215 ILCS 5/154.5 through 154.10 (unfair claim practices, sales tax and title fees on total-loss claims, and the duty to describe the basis of the total-loss determination), and the Department of Insurance's claims regulations at 50 Ill. Adm. Code Part 919, particularly § 919.80(c) for total loss vehicle claims and Exhibit A. 50 Ill. Adm. Code § 919.80(c) — Total Loss Vehicle Claims. When an insured vehicle has been determined a total loss, the company shall provide the insured with the information in Exhibit A within 7 days of the determination, and shall follow one of the following methods: (1) Replacement vehicle. The company may locate a comparable vehicle by the same manufacturer, same year, similar body style, similar options, and similar price range. Once located, the insured shall be advised of the location and the replacement value, including applicable taxes, license, and transfer fees. If the insured rejects the replacement and elects cash, the company need pay only the amount it would have paid on the replacement. (2) Cash settlement. The company shall use one of the following methodologies to determine market value: (A) A printed source published at least once every two months containing average retail, wholesale, and finance value for all makes and models for at least each of the last 5 model years, with a listing and price for all major options. (B) An electronically computerized source that computes statistically valid retail values, including all major options and equipment, with allowances for mileage and condition, for at least 85% of all makes and models for at least each of the last 15 model years; the value must be based on data from the area immediately surrounding where the insured vehicle was principally garaged and based upon data compiled on at least 1.5 million passenger vehicles; and the source must compile, maintain, and provide on request a record of valuations and monthly summaries of the average retail value, option value, and mileage for each general metropolitan area for the preceding 24-month period. (C) An electronically computerized service including at least 2 currently available vehicles or 2 vehicles sold by licensed dealers in Illinois (one within the past 30 days and one within the past 90 days), with each licensed dealer within 50 miles of the general metropolitan area where the data is gathered. The names and locations of the dealers, plus the VINs, shall be maintained in the claim file. (D) If the insured vehicle is not quoted in the source(s) used by the company, the company shall base settlement on at least two written dealers' quotations. (E) The claim file shall contain documentation of how the market value of the insured automobile was determined. (F) Right of Recourse. If, within 30 days after receipt of the claim draft, the insured cannot purchase a comparable vehicle in excess of such market value, the company will reopen its claim file and the following procedures shall apply: (i) locate a comparable vehicle, (ii) pay the difference between the market value and the cost of a comparable vehicle of like kind and quality, (iii) elect to offer a replacement under (c)(1), or (iv) conclude the loss settlement under the appraisal section of the insurance contract, which shall be considered binding against both parties (without precluding or waiving any other rights either party has). 215 ILCS 5/154.6 — Improper Claims Practices. The statute lists 19 enumerated acts (subsections (a)–(s)) that constitute improper claims practices when committed knowingly or with such frequency as to indicate a persistent tendency to engage in that type of conduct (per § 154.5's dual trigger), including misrepresenting pertinent facts or policy provisions; failing to acknowledge claim communications with reasonable promptness; failing to affirm or deny coverage within a reasonable time; not attempting in good faith to effectuate prompt, fair, and equitable settlements when liability is reasonably clear; refusing to pay claims without conducting a reasonable investigation; and failing to promptly provide a reasonable explanation of the basis of denial or compromise. 215 ILCS 5/154.9 (effective for policies issued or renewed on or after July 1, 2022) — Sales Tax, Title, and Transfer Fees. On a total-loss claim, the insurer must pay any state or local use/occupation tax and title and transfer fees on the replacement, or reimburse those amounts on a cash settlement when the insured purchases or leases a replacement within 30 days and substantiates the purchase within 33 days. With respect to leased vehicles, taxes and fees are deemed incurred at the time the lease is entered into. 215 ILCS 5/154.10 (effective for policies issued or renewed on or after July 1, 2025) — Description of the Determination of a Total Loss. Upon determination that an insured vehicle is a total loss, the insurance company shall provide the insured with a brief description of how that determination was made, including any available repair estimate, estimated salvage value, assessed market value, and other costs and calculations used.