State Farm total-loss settlements in New York: how to negotiate a fair offer

New York regulates first-party automobile total losses through three layered authorities: the Unfair Claim Settlement Practices statute at N.Y. Insurance Law § 2601 (no private cause of action), the claim-handling regulation at 11 NYCRR Part 216 (Insurance Department Regulation 64), and the consequential-damages rule for breach of the covenant of good faith and fair dealing in Bi-Economy Market, Inc. v. Harleysville Insurance Co., 10 N.Y.3d 187 (2008). N.Y. Vehicle and Traffic Law § 398-d(5) separately licenses persons who write auto body repair estimates for repair shops. SecondAppraisal Inc supplies market research and valuation analysis in New York rather than serving as the appraisal-clause appraiser of record. N.Y. Vehicle and Traffic Law § 398-d(5) — Repair-Shop Estimator License. Section 398-d sets motor vehicle repair shop requirements; under subdivision 5, every person who writes an auto body repair estimate on behalf of a motor vehicle repair shop, whether registered or not, must hold an estimator's license issued by the Commissioner of Motor Vehicles. The person who inspects a damaged vehicle on behalf of an insurer must instead be licensed or authorized under article 21 of the Insurance Law to negotiate the loss (11 NYCRR 216.7(b)(3), which 216.7(c)(7) applies to total losses). 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 under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them. Section 2601 does not authorize a private cause of action (Rocanova v. Equitable Life Assurance Society, 83 N.Y.2d 603, 614 (1994), as cited in Zawahir v. Berkshire Life Ins. Co., 22 A.D.3d 841 (2d Dep't 2005)); § 2601(c) provides for monetary penalties after notice and an opportunity to be heard. 11 NYCRR Part 216 — Unfair Claims Settlement Practices and Claim Cost Control Measures (Insurance Department Regulation 64). Section 216.7 ("Standards for prompt, fair and equitable settlement of motor vehicle physical damage claims") governs claims under collision and comprehensive coverages; § 216.4 sets the acknowledgment rule; § 216.6(b) defines actual cash value. (216.7(c)(1)) Valuation methods. If the insurer elects a cash settlement, its minimum offer, subject to applicable deductions, must be one of the following: (i) the average of the retail values for a substantially similar vehicle in two valuation manuals current at the date of loss and approved by the Department (the regulation names the Redbook and the N.A.D.A. Official Used Car Guide); (ii) a quotation for a substantially similar vehicle from a qualified dealer within 25 miles of where the vehicle is principally garaged, which must remain available for purchase for three calendar days after the insured receives notice of it; or (iii) a quotation from a computerized database approved by the superintendent that produces statistically valid fair market values for a substantially similar vehicle within the local market area, a 100-mile radius of the place of principal garagement (216.7(a)(10)). Under subparagraph (iv), for a vehicle the insured bought within the 180 calendar days before the loss, the insurer may limit its offer to the purchase price plus the cost of substantiated improvements, less the deductible, when (i), (ii) or (iii) would produce a higher offer; this does not apply to a vehicle the insured acquired in a private sale or as a gift. Subparagraph (v) covers a vehicle none of those methods can value. (216.6(b)) Sales tax. Actual cash value, as Part 216 defines it, includes "all monies paid or payable as sales taxes" on the item repaired or replaced (216.6(b)(2)), unless the policy or a law specifically defines actual cash value otherwise (216.6(b)). The Department's Office of General Counsel has said the sales tax is added to the vehicle's pre-accident value before any salvage deduction, and that no law or regulation requires the insurer to include a title transfer fee, though an insurer may pay one as a component of loss if it does so in a uniform and non-discriminatory manner (OGC Op. No. 08-10-13). (216.7(b)(12), applied to total losses by 216.7(c)(7)) Itemized deductions. Deductions for previous damage or prior condition of the vehicle must be measurable, discernible, itemized and specified as to dollar amount, and detailed in the claim file. Generic adjustments without that specification do not meet the regulation. (216.7(c)(4)–(5)) Right of recourse. If, within 35 calendar days after the claim payment is mailed, the insured notifies the insurer in writing that the insured cannot purchase a comparable vehicle for the market value determined under 216.7(c)(1)(i), (ii) or (iii), under 216.7(c)(1)(v) (the best available method, where none of the listed methods can be used), or under the regulation's current-model-year rule, the insurer must reopen its claim file. It must then offer, at its discretion and subject to applicable deductions, one of two options, each tied to a substantially similar vehicle as provided in 216.7(c)(1)(ii): identify and offer for settlement an amount sufficient to purchase one, or pay the insured the difference between its claim payment and the cost of one the insured located (or, with the insured's consent, buy that vehicle for the insured). Under 216.7(c)(5) the insurer need not act if its documentation to the insured at the time of its final offer included written notification of the availability of such a vehicle that remained available for at least three calendar days after the insured received that offer; the documentation must include the vehicle identification number, the stock number or order number. Section 216.7 governs claims under collision and comprehensive coverages, and it does not require the insurer to tell the insured about this right. (216.7 + 216.4) Time standards. Under 216.7(b)(1), an insurer that intends to inspect before repair has six business days after receiving notice of the claim to inspect, and must make a good-faith offer within that period; under 216.7(c)(7), it has five additional business days for a total loss, and for an unrecovered theft loss it must make its offer by the 25th calendar day after notice of loss if the insured has provided the information it requested. Under 216.7(d)(1), unless clear justification exists, no more than 20% of a representative sample of physical damage claims selected by Department examiners may have a payment period over 30 calendar days. Under 216.7(d)(2), if any element of a claim remains unresolved more than 30 calendar days after notice, the insurer must give the insured a written explanation of the specific reasons for the delay and, unless the matter is in litigation, an updated letter every 30 calendar days. Section 216.4(a) requires the insurer to acknowledge receipt of a notice of claim within 15 business days. Bi-Economy Market, Inc. v. Harleysville Insurance Co., 10 N.Y.3d 187 (2008) — Consequential Damages. The Court of Appeals held that, under the circumstances of that case, an insured suing for breach of a commercial property insurance contract could assert a claim for consequential damages. Panasia Estates, Inc. v. Hudson Insurance Co., 10 N.Y.3d 200 (2008), decided the same day, states the rule: consequential damages resulting from a breach of the covenant of good faith and fair dealing may be asserted in an insurance contract context, so long as the damages were "within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting." Proof of consequential damages cannot be speculative or conjectural. Salvage Vehicle Branding — 11 NYCRR 216.7(b)(16); 15 NYCRR 20.20(c). For a vehicle eight model years old or newer on the date of loss, if the insurer determines that the cost to repair exceeds 75 percent of the vehicle's actual cash value and does not take possession of the vehicle for disposition as salvage, it must require the owner to provide the title and must withhold at least 50 percent of its claim payment, after any deductible, until it receives the title. The owner is told that the title is requested to comply with 15 NYCRR 20.20(c), will be branded "REBUILT SALVAGE", and will be returned by the Department of Motor Vehicles. Section 216.7(c)(7) applies this paragraph to total losses. Section 398-d(5)'s estimator license covers writing auto body repair estimates on behalf of a motor vehicle repair shop. SecondAppraisal Inc supplies the market research and valuation analysis behind a policyholder's independent appraiser's opinion.