ANSWERS TO THE MOST FREQUENTLY

ANSWERS TO THE MOST FREQUENTLY

ASKED QUESTIONS ABOUT REGULATION 64

Edward C. Kizenberger, Executive Director

Richard W. Skora, President

Eugene R. Anderson, Esq. Gary M. Fader, Esq.

Anderson, Kill & Olick, P.C. Lawyer and Insurance Consultant

Attorneys and Counselors at Law 19 Rhoda Avenue

1251 Avenue of the Americas Nutley, N.J. 07110

New York, N.Y. 10020-1182 (201) 667-7373

(212) 278-1751

TABLE OF CONTENTS

PAGE

Introduction...................................................................... 1

Answers to the Most Frequently Asked Questions About Regulation 64

Part 1: Partial Losses

I. Choosing the Repair Shop................................ 3

II. Inspecting the Damages.................................... 9

III. The Designated Representative...................... 12

IV. The Insurance Company's Estimate............... 15

V. Non-original Equipment Parts........................ 19

VI. Discovering Hidden Damage.......................... 22

VII. Allowable Deductions..................................... 23

VIII. Getting Paid...................................................... 25

Part 2: Total Losses

I. Cash Settlement Methods............................... 29

II. Vehicle Replacement....................................... 33

III. Allowable Depreciation................................... 34

IV. Right of Recourse............................................ 36

V. Salvage Value.................................................. 38

VI. The 30-Day Settlement Rule and its Exceptions 40

VII. Loss of Use....................................................... 42

VIII. .......................................................... Subrogation 42

IX. Losses Due to Theft......................................... 45

TABLE OF CONTENTS (Cont'd)

PAGE

Part 3: Third Party Damage Claims

I. Initial Claims Processing................................ 49

II. Comparative Negligence................................. 50

III. Requesting Additional Information............... 51

IV. Informing the Policyholder............................. 52

V. Acceptance or Denial of a Claim.................... 53

VI. Permissible Delays.......................................... 54

Part 4: Record keeping Requirements

I. Record keeping Requirements........................ 55

Part 5: Text of Regulation 64

§216.0 Preamble........................................................... 56

§216.1 Definitions........................................................ 59

§216.2 Applicability.................................................... 60

§216.3 Misrepresentation of policy provisions......... 61

§216.4 Failure to acknowledge pertinent communications 62

§216.5 Standards for prompt investigation of claims 63

§216.6 Standards for prompt, fair and equitable settlements 64

§216.7 Standards for prompt, fair and equitable settlement

of motor vehicle physical damage claims...... 67

§216.8 Verification and reporting requirements applicable

to losses arising under automobile physical

damage policies and reporting of third‑party

property damage losses................................... 90

TABLE OF CONTENTS (Contd.)

PAGE

§216.9 Written notice to claimants of payment of

claim in third‑party settlements...................... 97

§216.10 Standards for prompt, fair and equitable settlement

of third‑party property damage claims arising

under Motor vehicle liability insurance contracts 98

§216.11 Examinations................................................. 101

§216.12 Forms.............................................................. 103

Index.............................................................................. 110

INTRODUCTION

When an automobile in New York State is damaged, the first thought is: "fix it" and the second thought is: "insurance". The "fix it" part is familiar to the members of the New York State Auto Collision Technician's Association (NYSACT). The "insurance" part is not.

Insurance in New York is regulated by state law. A number of statutes and regulations apply to automobile body repair insurance claims, including what is referred to as "Regulation 64."

Why is understanding Regulation 64 and the other state laws important? Insurance companies know that every dollar paid out in claims, every dollar spent on auto body repairs, is a direct hit to the insurance company's bottom line. Insurance companies also know that the automobile owners, the policyholders, are unaware of their rights when faced with an auto body repair claim. Without the protection of, and an understanding of, the state laws governing insurance, the policyholders and the members of the NYSACT are at a disadvantage.

This pamphlet is a source of information for NYSACT members about the "insurance" part of automobile body repair claims. It answers frequently asked questions about procedures to be followed and provides, with each question, the text of the law that relates to that question. All of the questions are numbered. A complete copy of Regulation 64 is also provided.

Answers to questions can be found either by referring to the Table of Contents or the Index. The Index is arranged by subject, with the number of the question and the page number listed after the subject.

In order to make the questions and answers easy to read the insurance company (often termed the "insurer" in the statutes and regulations) is referred to as the "insurance company" and the person who has purchased the insurance policy, or who is covered by the insurance policy (often called the "insured" in the statutes and the regulations), is referred to as the "policyholder."

This pamphlet is intended to be a resource for use every day in every NYSACT member's shop. If you have suggestions or comments, please contact me.

Edward C. Kizenberger, Executive Director

(516) 474-0596

ANSWERS TO THE MOST FREQUENTLY

ASKED QUESTIONS ABOUT

REGULATION 64

PART 1: PARTIAL LOSSES

I. CHOOSING THE REPAIR SHOP

1. Q: Can an insurance company compel a policyholder to use a particular repair facility?

A: No. Any insurance company attempting to do so would find itself in direct violation of Section 2610 of the New York Insurance Code [N.Y. Ins. L. §2610 (McKinney 1997)]. It would then not only be subject to severe penalties from the Insurance Department, but it would expose itself to a civil suit by the policyholder for unfair and fraudulent trade practices.

N.Y. Ins. L. §2610

(a) Whenever a motor vehicle collision or comprehensive loss shall have been suffered by an insured, no insurer providing collision or comprehensive coverage therefor shall require that repairs be made to such vehicle in a particular place or shop or by a particular concern.

(b) In processing any such claim (other than a claim solely involving window glass), the insurer shall not, unless expressly requested by the insured, recommend or suggest repairs be made to such vehicle in a particular place or shop or by a particular concern.

This is further supported by a requirement in the Motor Vehicle Repair Shop Registration Act [N.Y. Veh. & Traf. L. §398-d.4.(a)].

N.Y. Veh. & Traf. L. §398-d

4. (a) Every motor vehicle repair shop shall display in a conspicuous place in such shop a sign stating: PURSUANT TO SECTION 2610 OF THE INSURANCE LAW AN INSURANCE COMPANY MAY NOT REQUIRE THAT REPAIRS BE MADE TO A MOTOR VEHICLE IN A PARTICULAR PLACE OR REPAIR SHOP. YOU HAVE A RIGHT TO HAVE YOUR AUTOMOBILE REPAIRED IN THE SHOP OF YOUR CHOICE.

In addition, every insurance company drive-in (including mobile units) must post this sign because they must also be registered as repair shops.

2. Q: Can an insurance company suggest one or more repair shops?

A: This Regulation has recently changed. Contact LIABRA for clarification.

This is further supported by a requirement in the Motor Vehicle Repair Shop Registration Act [N.Y. Veh. & Traf. L. §398-d.4.(a)].

N.Y. Veh. & Traf. L. §398-d

In addition, every insurance company drive-in (including mobile units) must post this sign because they must also be registered as repair shops.

3. Q: How will I know that the policyholder made such a request?

A: The insurer must retain such a request in its claim file. [Reg.64 Sec. 216.7 (15) (iii)

Sec. 216.7 (15) (iii) shall retain in its claim file a signed section 2610 of the Insurance Law Disclosure Statement (NYS APD I‑a), contained in section 216.12 of this Part, or other written documentation that the insured requested recommendation of a repair facility. If the insured has verbally requested a recommendation of a repair facility prior to the issuance of the prescribed Notice of Rights form, the requirement for written proof of referral shall be satisfied by a notation in the claim files as to the date of such request and the identity of the person to whom such request was made. The requirement of this subparagraph shall not be applicable to a claim solely involving window glass.

4. Q: What about verbal requests for recommendations?

A: Verbal requests are acceptable, but the insurance company must note the request in its file along with the date it was made and to whom it was made. [Reg. 64, Sec. 216.7(b)(15)(iii) see above]

5. Q: What if the insurer and insured/DR cannot reach an agreed price?

A: Only than can the insurer recommend a back-up shop after the insured is furnished with a prescribed Notice of rights letter (NYS APD 1), contained in section 216.12 of this part.

Sec. 216.7 (14) (i)(ii) And Sec. 216.7 (15) (i)(ii)(iii)

Sec. 216.7(14) (i) If after negotiations an agreed price cannot be reached, the insurer must furnish the insured with a prescribed Notice of Rights letter (NYS APD 1), contained in section 216.12 of this Part. The requirement of this subparagraph shall not be applicable to a claim solely involving window glass.

INSURER LETTERHEAD

NOTICE OF RIGHTS UNDER YOUR

PHYSICAL DAMAGE INSURANCE POLICY

INSURED______________________

CLAIM #______________________

POLICY #_____________________

DATE OF ACCIDENT_____________

Dear Insured:

We have been unable, after negotiating in good faith, to reach an agreed price with you, your Designated Representative and/or your repairer _______________________, the repairer of your choice.

Pursuant to Regulation 64 of the New York Insurance Department, we are supplying you with the following information and optional waiver.

Our offer of $________ plus your deductible of $_________ and $__________ of betterment or previous damage deduction is sufficient to repair your vehicle to its pre‑accident condition at a repair shop located reasonably convenient to you. We are able to provide you with the identity of the repair shop that will repair your vehicle at our estimate, but under the Insurance Law we may not recommend a repairer unless you expressly request such information. Unless you have already asked us to recommend a repair shop, you must sign the attached Section 2610 of the Insurance Law Disclosure Statement in order to enable us to make such recommendation.

If your vehicle is repaired at a repair shop recommended by us, the repair shop must issue a written guarantee that any work performed in repairing your vehicle meets generally accepted standards for safe and proper repairs. If our recommended repairer does not honor its written guarantee, we will restore your vehicle to its pre‑accident condition within a reasonable time at no additional cost to you.

Your policy covers you for reasonable expenses you incur in order to protect your motor vehicle from further damage after a loss. Contact us immediately for information as to what extent such expenses are covered. NYS APD I

[INSURANCE COMPANY LETTERHEAD]

SECTION 2610 OF THE INSURANCE LAW

DISCLOSURE STATEMENT

Section 2610 of the New York State Insurance Law provides that the insurance carrier shall not require that repairs be made in a particular place or shop or by a particular concern.

The Law further provides that the Insurance Company shall not recommend or suggest repairs be made in a particular place or shop or by a particular concern, unless expressly requested by you.

I acknowledge receipt of a copy of this notice.

_________________________________ _______________

DATE SIGNATURE

INSURED/VEHICLE OWNER

I have read the above notice and understand the Insurance Company cannot require or recommend that repairs be made in a particular place or by a particular person unless I expressly request such recommendation. I hereby, of my own volition, request that the Insurance Company or its representative recommend a repair shop.

__________________________ ________________

DATE SIGNATURE

INSURED/VEHICLE OWNER

(ii) The insurer must furnish the insured or the designated representative, at the express request of either, with the name and address of a New York State registered motor vehicle repairer, properly equipped to complete the repairs on the damaged motor vehicle (back‑up shop), at a location reasonably convenient to the insured, who will repair the damaged motor vehicle at the insurer's estimated cost of repair. A location reasonably convenient to the insured shall mean: in Nassau, Suffolk and Westchester Counties and cities with 100,000 or more population, 10 miles‑and in all other areas of the State, 25 miles‑from the place where the motor vehicle is principally garaged; or the location of the insured's repair facility. This mileage limitation shall not apply when a repair facility properly equipped to complete the repairs is not available within the above geographical area. In such a case a properly equipped facility must be selected at a location as close as possible to the above definition of reasonably convenient to the insured. The insurer must furnish the insured, upon request, with a statement from the back‑up shop that it will repair the vehicle in a manner consistent with the insurer's estimate for the amount estimated by the insurer to repair the damaged vehicle.

Sec. 216.7(15) (i)(ii)(iii)

If the insured's motor vehicle is repaired at a repair shop recommended by the insurer, for a sum estimated by the insurer as the reasonable cost to repair the vehicle, the insurer:

(i) shall select a repair shop that issues written guarantees that any work performed in repairing damaged motor vehicles meets generally accepted standards for safe and proper repairs;

(ii) shall cause the damaged vehicle to be restored to its condition prior to the loss, at no additional cost to the insured and within a reasonable time, if the repair shop it recommended does not repair the damaged motor vehicle in accordance with generally accepted standards for safe and proper repair; and

(iii) shall retain in its claim file a signed section 2610 of the Insurance Law Disclosure Statement (NYS APD I‑a), contained in section 216.12 of this Part, (see page 6) or other written documentation that the insured requested recommendation of a repair facility. If the insured has verbally requested a recommendation of a repair facility prior to the issuance of the prescribed Notice of Rights form, the requirement for written proof of referral shall be satisfied by a notation in the claim files as to the date of such request and the identity of the person to whom such request was made. The requirement of this subparagraph shall not be applicable to a claim solely involving window glass.

II. INSPECTING THE DAMAGES

6. Q: Must the insurance company inspect a damaged vehicle prior to repair?

A: Surprisingly, the answer is no. This is a right, not an obligation, although most insurance companies do exercise the right.

7. Q: If an insurance company wishes to inspect the damage, when must the inspection take place?

A: Within six (6) business days (i.e. days other than Saturdays, Sundays, and legal holidays) from the notification to the policyholder that an accident has taken place. The inspection must be at a time and place reasonably convenient to the policyholder. [Reg. 64, Sec. 216.7(b)(1)]

§216.7(b)(1)

(b) Adjustment of partial losses. (1) If, upon notification of a loss, the insurer intends to exercise its right to inspect damages prior to repair, it shall have six business days following receipt of notice of claim to inspect the insured's damaged motor vehicle, which is available for inspection, during normal business hours at a place and time reasonably convenient to the insured. In addition, negotiations shall commence and a good faith offer of settlement, sufficient to repair the vehicle to its condition immediately prior to the loss, shall be made within the aforesaid six‑day period to the designated representative, and it may also be made to the insured. If there is no designated representative, the offer shall be made to the insured within the six‑day period.

8. Q: What happens if the insurance company fails to inspect the damages during the six-day window of opportunity?

A: Assuming that the vehicle was available for inspection during normal business hours throughout the six days, then the insurance company forfeits its rights to inspect the damages prior to their repair. In addition, the insurance company's negotiation rights are limited to labor and the price of parts. It cannot dispute the existence of damages or the method of repair. [Reg. 64, Sec. 216.7(b)(8)]

§216.7(b)(8)

(8) If the insurer fails to inspect the damaged motor vehicle during the aforementioned six business‑day period, it shall forfeit its right to inspect the damaged vehicle prior to repairs. Unless the insured or designated representative shall permit an inspection after the six‑day period, negotiations shall be limited to labor and the price of parts and shall not, unless objective evidence to the contrary is provided by the insurer, involve disputes as to the existence of damage or the chosen manner of repair. For the above forfeiture‑of‑inspection provision to apply, the damaged vehicle must be available for inspection during normal business hours for the entire aforementioned six‑business‑day period.

9. Q: Can an insurance company require that the policyholder obtain the estimate?