Chapter 12. Valuation of Motor Vehicles
Regulation .01 Scope.LinkCopy Citation
A.
Except as provided in §B of this regulation, this chapter applies to each claim for property damage to a private passenger motor vehicle arising under a policy of insurance, including a claim arising under:
(1)
Collision coverage;
(2)
Liability property damage coverage;
(3)
Comprehensive property damage coverage; or
(4)
Uninsured motorist property damage coverage.
B.
This chapter does not apply to a claim for property damage to a private passenger motor vehicle insurance that does not involve a total loss as defined in Regulation .02B(9) of this chapter.
Regulation .02 Definitions.LinkCopy Citation
A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Business day” means a day other than Saturday, Sunday, a federal holiday, or a State holiday as designated by State Personnel and Pensions Article, §9-201, Annotated Code of Maryland.
(2)
“Claim” means a demand for payment or reimbursement for a loss incurred under one or more coverages provided by an insurance policy.
(3)
“Claimant” includes a first-party claimant and a third-party claimant.
(4)
“First-party claimant” means a person asserting a right to payment:
(a)
Under an insurance policy pursuant to which the person is insured; and
(b)
That arises out of a loss that is covered by the insurance policy.
(5)
“Motor vehicle” has the meaning stated in Insurance Article, §19-501(b), Annotated Code of Maryland.
(6)
“Notification of a claim” means notification by a claimant that:
(a)
Is made in writing or by other means acceptable under the terms of an insurance policy;
(b)
Reasonably informs the insurer of the facts pertinent to the claim; and
(c)
Is made:
(i)
Directly to the Maryland Automobile Insurance Fund, in the case of a policy issued by the Fund; or
(ii)
To an insurer or its insurance producer who has an appointment from that insurer as defined in Insurance Article, §1-101(f), Annotated Code of Maryland, in all other cases.
(7)
“Substantially similar motor vehicle” means a motor vehicle that, in comparison to a damaged motor vehicle:
(a)
Is the same make and model as the damaged motor vehicle;
(b)
Is the same year as, or a more recent year than, the damaged motor vehicle;
(c)
Contains at least the same major options as the damaged motor vehicle;
(d)
Is in a condition substantially similar to or better than the condition of the damaged motor vehicle immediately before the damage occurred; and
(e)
Has mileage that is within the greater of 4,000 miles or 10 percent of the mileage on the damaged motor vehicle at the time that the damage occurred unless the vehicle is limited in production, specialty in nature, or older than 10 model years at the time of total loss.
(8)
“Third-party claimant” means any person asserting a claim against a person insured under an insurance policy.
(9)
“Total loss” means the condition of a motor vehicle for which:
(a)
The cost of repairs equals or exceeds:
(i)
The actual cash value of the motor vehicle as calculated in accordance with Regulation .04 of this chapter; or
(ii)
A percentage of the actual cash value of the motor vehicle established by the insurer and calculated in accordance with Regulation .04 of this chapter; or
(b)
The total cost to repair the motor vehicle, plus the estimated cost of potential repairs from hidden damage, plus any anticipated rental coverage, may equal or exceed:
(i)
The actual cash value of the motor vehicle as calculated in accordance with Regulation .04 of this chapter; or
(ii)
A percentage of the actual cash value of the motor vehicle established by the insurer and calculated in accordance with Regulation .04 of this chapter.
Regulation .03 Duties of Insurer Following Determination of Total Loss of Motor Vehicle.LinkCopy Citation
A.
Scope. The deadlines set by §§B—D of this regulation do not apply to a claim for damage that results in the total loss of a motor vehicle if:
(1)
There is a good faith dispute as to the obligation of the insurer under the contract; or
(2)
There are factors beyond the control of the insurer that prevent the insurer from complying with the deadlines set by §§B—D of this regulation, including a vehicle that is limited in production, specialty in nature, or older than 10 model years at the time of the total loss.
B.
First-Party Claimants—In General. Except as provided in §C of this regulation, within 10 business days after an insurer determines that a motor vehicle of a first-party claimant is a total loss, the insurer shall:
(1)
Make an offer of a cash settlement pursuant to Regulation .04 of this chapter; or
(2)
If authorized by the policy, replace the motor vehicle pursuant to Regulation .07 of this chapter.
C.
First-Party Claimants—Unrecovered Theft Loss. In the case of an unrecovered theft loss of the motor vehicle of a first-party claimant, an insurer shall make an offer for the total loss within the later of:
(1)
30 days after receipt of notification of a claim; or
(2)
The time provided in the policy.
D.
Third-Party Claimants. Within 10 days after an insurer determines that a motor vehicle of a third-party is a total loss, the insurer shall make an offer of a cash settlement pursuant to Regulation .04 of this chapter.
Regulation .04 Cash Settlement.LinkCopy Citation
If an insurer elects to make a cash settlement for the total loss of a motor vehicle pursuant to Regulation .03 of this chapter, the insurer's minimum offer, subject to applicable deductions, shall be:
A.
The total of:
(1)
The retail value for a substantially similar motor vehicle from a nationally recognized valuation manual or from a computerized data base that produces statistically valid fair market values for a substantially similar vehicle as defined in Regulation .02B(7) of this regulation; and
(2)
Regardless of whether the claimant retains salvage rights, the applicable taxes and transfer fees pursuant to COMAR 11.11.05; or
B.
The total of:
(1)
A quotation for a substantially similar motor vehicle obtained by or on behalf of the insurer from a qualified dealer at a location reasonably convenient to the claimant; and
(2)
Regardless of whether the claimant retains salvage rights, the applicable taxes and transfer fees pursuant to COMAR 11.11.05.
Regulation .05 Contents of Settlement Offer.LinkCopy Citation
A.
In General. A settlement offer made by an insurer pursuant to Regulation .04 of this chapter shall:
(1)
State the amount being offered;
(2)
Inform the claimant that, on request from the claimant, the insurer shall provide the claimant in writing:
(a)
A copy of the settlement offer;
(b)
The method used to arrive at the value of the motor vehicle, including identification of any books, manuals, or databases used;
(c)
A detailed explanation of the insurer's calculation of the motor vehicle's total loss value, including the calculation of any value added to the motor vehicle by options;
(d)
A list of all deductions that will be made from the value of the motor vehicle; and
(e)
A copy of the inspection guidelines relied on by the insurer to determine the condition of the vehicle at the time of the loss; and
(3)
Inform the claimant that the claimant may, in writing, reject the settlement offer and make a counteroffer in accordance with Regulation .06 of this chapter.
B.
If a claimant makes a request under §A(2) of this regulation, the insurer shall provide a response within 7 business days of the date of the request.
Regulation .06 Response by Claimant to Settlement Offer.LinkCopy Citation
A.
In General. After receipt of a settlement offer, a claimant may:
(1)
Accept the offer; or
(2)
In writing, reject the offer and make a counteroffer based on:
(a)
Dealer quotations for a substantially similar motor vehicle;
(b)
Advertisements for a substantially similar motor vehicle; or
(c)
Any other source of valuation for a substantially similar motor vehicle.
B.
Duty of Insurer. If an insurer rejects a claimant's counteroffer made pursuant to §A(2) of this regulation, the insurer shall, within 5 business days, send to the claimant a written explanation in clear and understandable language of why the information relied on by the claimant in the counteroffer does not provide a more accurate valuation than the information relied on by the insurer in its offer.
Regulation .07 Replacement of Motor Vehicle.LinkCopy Citation
If an insurer elects to replace a motor vehicle pursuant to Regulation .03B(2) of this chapter and the insurance policy provides authority for the replacement as an acceptable method of settlement, the insurer shall provide the claimant with a motor vehicle that is:
A.
A substantially similar motor vehicle;
B.
Immediately available; and
C.
Subject to any deductible, paid for by the insurer.
Chapter annotations
Authority: Insurance Article, §27-304.1, Annotated Code of Maryland
History: Effective date: July 5, 2004 (31:13 Md. R. 996)
History: Regulation .01 amended effective March 24, 2008 (35:6 Md. R. 702)