AN ACT CONCERNING THE SETTLEMENT AMOUNT ON TOTALLED MOTOR VEHICLES.

This bill allows an insurer, when it declares a covered damaged vehicle a “constructive total loss,” to offer the claimant, a replacement vehicle comparable to the totaled vehicle at no cost. (It is unclear what “comparable” means as the bill uses that term, e. g. , whether the replacement must be similar in condition and mileage to the vehicle as it was immediately preceding the accident. )

If the insurer does not offer a replacement vehicle, then the bill requires it to pay the claimant a cash settlement. Current law requires an insurer to calculate the cash settlement amount based on certain auto industry sources. The bill modifies the calculation process by requiring the insurer to use the claimant's choice of three methods (see below).

By law, a vehicle is a “constructive total loss” if the cost to repair or salvage it, or both, equals or exceeds the vehicle's total value at the time of loss.

Under the bill, the replacement vehicle the insurer offers must be a specific vehicle in Connecticut that is comparable to the make, model, and year of the totaled vehicle. The bill requires the insurer to pay all applicable taxes on the replacement vehicle.

If the insurer does not offer a replacement vehicle, the bill requires the claimant to (1) choose which of three methods the insurer must use to determine a cash settlement amount and (2) provide the insurer the information necessary to effectuate that choice. The three calculation methods are:

1. the average retail price and all applicable taxes for a vehicle that is (a) comparable to the make, model, and year of the totaled vehicle and (b) available to buy from at least two different licensed motor vehicle dealers in the claimant's local market area;

2. the average written price quote for a vehicle comparable to the make, model, and year of the totaled vehicle from at least three different licensed motor vehicle dealers and all applicable taxes if such a vehicle is not available to buy in the claimant's local market area (presumably from a licensed motor vehicle dealer, and it is unclear if a claimant would have to prove that one was not available to buy, or how he or she could prove it); or

3. the retail value from the National Automobile Dealers Association (NADA) used car guide or other publicly available auto industry source the insurance commissioner has approved for this purpose.

Current law requires an insurer to pay at least the average retail value provided in two sources: (1) the NADA used car guide and (2) one other auto industry source the insurance commissioner has approved for this purpose. Such sources incorporate a vehicle's condition, mileage, and other features when establishing a retail value.

Yea

Nay

(03/05/2009)