Report Title:

Total Loss Motor Vehicle Claims

Description:

In cases of total loss motor vehicle claims requires insurers to first offer a replacement vehicle and if refused, a cash settlement based on the retail value of the vehicle in the county in which the vehicle was registered. For cash settlements, requires insurers to pay the loan balance on the vehicle up to 110 per cent of the vehicle's retail value, if the balance is greater than the vehicle's retail value.

HOUSE OF REPRESENTATIVES

H.B. NO.

1471

TWENTY-THIRD LEGISLATURE, 2005

  

STATE OF HAWAII

  

 

A BILL FOR AN ACT

 

relating to total loss motor vehicle claims.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 431:10C, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§431:10C- Total loss motor vehicle claims: information. Upon receipt of a total loss motor vehicle claim, the insurer shall provide the insured with a document, approved by the commissioner, informing the insured of all rights under the Hawaii Revised Statutes relating to total loss motor vehicle claims."

SECTION 2. Section 431:10C-309, Hawaii Revised Statutes, is amended to read as follows:

"§431:10C-309 Total loss motor vehicle claims. When a motor vehicle insurance policy provides for the adjustment and settlement of an insured's motor vehicle's total losses on the basis of [actual] retail cash value or replacement, the insurer shall [follow either the replacement method set forth in section 431:10C-310 or the cash settlement method set forth in section 431:10C-311.] offer the insured a replacement vehicle as defined in section 431:10C-310. In the event the insured refuses a replacement vehicle, the insurer shall offer, in writing, a cash settlement in accordance with section 431:10C-311."

SECTION 3. Section 431:10C-310, Hawaii Revised Statutes, is amended to read as follows:

"§431:10C-310 Total loss motor vehicle claims: replacement. [When an insurer elects under section 431:10C-309 to offer the insured a replacement vehicle as defined in section 431:10C-103,] In offering the insured a replacement vehicle in accordance with section 431:10C-309, the insurer shall comply with the following requirements:

(1) The claim file, which is maintained by the insurer, shall contain a description of the replacement vehicle, including the vehicle identification number and a schedule of options;

(2) Replacement vehicles of the current model plus the three previous model years shall be purchased through motor vehicle dealers licensed under chapter 437. This requirement may be waived in writing by the insured. The signed waiver shall be maintained in the insurer's claim file;

(3) If the insurer offers a replacement vehicle to the insured and the insured rejects the offer and elects a cash settlement instead of the replacement vehicle, the insurer need pay only the amount it would have otherwise paid on the replacement vehicle. Evidence of the insured's rejection shall be apparent in the file; and

(4) If the insurer offers a replacement vehicle to the insured and the insured rejects the offer and wants another vehicle substantially similar in value, the insurer need pay only the amount it would have otherwise paid on the replacement vehicle. The insurer shall maintain in the claim file the insured's written waiver that the acceptance of another vehicle is of the insured's own free will and choice."

SECTION 4. Section 431:10C-311, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) [When an insurer elects under section 431:10C-309 to offer the insured a cash settlement for a total loss motor vehicle claim,] When an insured refuses a replacement vehicle offered in accordance with section 431:10C-309, the following shall apply:

(1) The cash settlement shall be based upon the retail value of the motor vehicle [as determined from a source or sources which are reflective of the market value of the total loss vehicle.] in the county in which the total loss motor vehicle was registered;

(2) [The use of dealer] Dealer quotations (when the vehicle is available at the quoting dealer's lot) and newspaper advertisements [may be used in lieu of the source generally used by the insurer, if the claim file reflects that the vehicle was not quoted in the source generally used by the insurer or the source was not reflective of the market value. Dealer quotations and newspaper advertisements shall not be considered sole sources reflective of market values.] in the county in which the total loss motor vehicle was registered, shall be used in determining the retail value of the vehicle. When dealer quotations are used, the vehicle identification number shall be contained in the insured's claim file;

(3) Estimates from at least three licensed dealers may be used when [vehicles are not quoted in the source usually used by the insurer and are not available for replacement.] there are no vehicles available as required by paragraph (2). Dealer estimates shall take into consideration the condition of the insured vehicle prior to the loss; [and]

(4) [The documentation] Documentation of the determination of the total loss vehicle market value shall be maintained in the insurer's claim file[.]; and

(5) If any remaining loan balance on the total loss motor vehicle is more than the retail value of the vehicle, the insurer shall pay the insured a cash settlement equal to the amount of the remaining loan balance; provided that the cash settlement shall not exceed one hundred ten per cent of the vehicle's retail value."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:

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