HLS 10RS-1281 ENGROSSED
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are additions.
Regular Session, 2010
HOUSE BILL NO. 1011
BY REPRESENTATIVE HARRISON
INSURANCE/AUTOMOBILE: Provides relative to the adjustment and settlement of first-
party motor vehicle total losses
AN ACT1
To enact R.S. 22:1892(B)(5), relative to property and casualty insurance claims payment;2
to provide for the adjustment and settlement of first-party motor vehicle total losses;3
to provide a definition; and to provide for related matters.4
Be it enacted by the Legislature of Louisiana:5
Section 1. R.S. 22:1892(B)(5) is hereby enacted to read as follows: 6
ยง1892. Payment and adjustment of claims, policies other than life and health and7
accident; personal vehicle damage claims; extension of time to respond to claims8
during emergency or disaster; penalties; arson-related claims suspension9
* * *10
B.11
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(5) When an insurance policy provides for the adjustment and settlement of13
first-party motor vehicle total losses on the basis of actual cash value or replacement14
with another of like kind and quality, and the insurer elects a cash settlement based15
on the actual cost to purchase a comparable motor vehicle, such costs shall be16
derived by using one of the following:17
(a) A fair market value survey conducted using qualified retail automobile18
dealers in the local market area as resources. If there are no dealers in the local19
market area, the nearest reasonable market can be used.20
(b) The retail cost as determined from a generally recognized used motor21
vehicle industry source; such as, an electronic database, if the valuation documents22 HLS 10RS-1281 ENGROSSED
HB NO. 1011
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generated by the database are provided to the first-party claimant, or a guidebook1
that is available to the general public. If the insured demonstrates, by presenting two2
independent appraisals, based on measurable and discernable factors, including the3
vehicle's preloss condition, that the vehicle would have a higher cash value in the4
local market area than the value reflected in the source's database or the guidebook,5
the local market value shall be used in determining the actual cash value.6
(c) A qualified expert appraiser selected and agreed upon by the insured and7
insurer. The appraiser shall produce a written nonbinding appraisal establishing the8
actual cash value of the vehicle's preloss condition.9
(d) For the purposes of this Paragraph, local market area shall mean a10
reasonable distance surrounding the area where a motor vehicle is principally11
garaged, or the usual location of the vehicle covered by the policy.12
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Harrison HB No. 1011
Abstract: Provides for the adjustment and settlement of first-party motor vehicle total
losses.
Proposed law provides that when an insurance policy provides for the adjustment and
settlement of first-party motor vehicle total losses on the basis of actual cash value or
replacement with another of like kind and quality, and the insurer elects a cash settlement
based on the actual cost to purchase a comparable motor vehicle, such costs shall be derived
by using one of the following:
(1) A fair market value survey conducted using qualified retail automobile dealers in the
local market area as resources. If there are no dealers in the local market area, the
nearest reasonable market can be used.
(2) The retail cost as determined from a generally recognized used motor vehicle
industry source; such as, an electronic database, if the valuation documents generated
by the database are provided to the first-party claimant, or a guidebook that is
available to the general public. If the insured demonstrates, by presenting two
independent appraisals, based on measurable and discernable factors, including the
vehicle's preloss condition, that the vehicle would have a higher cash value in the
local market area than the value reflected in the source's database or the guidebook,
the local market value shall be used in determining the actual cash value. HLS 10RS-1281 ENGROSSED
HB NO. 1011
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CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
(3) A qualified expert appraiser selected and agreed upon by the insured and insurer.
The appraiser shall produce a written nonbinding appraisal establishing the actual
cash value of the vehicle's preloss condition.
Proposed law defines local market area as a reasonable distance surrounding the area where
a motor vehicle is principally garaged, or the usual location of the vehicle covered by the
policy.
(Adds R.S. 22:1892(B)(5))
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Insurance to the original
bill.
1. Added language that specified that when an insurer elected a cash settlement
based on the actual cost to purchase a comparable vehicle the costs must be
derived by using one of the options included in proposed law.
2. Removed a provision that provided insurers the option of using the highest
estimate of two or more estimates obtained by the insurer from two or more
qualified dealers which engage in the buying and selling of comparable motor
vehicles located in the local market area.
3. Added a provision that provides insurers the option of using a fair market value
survey conducted using qualified retail automobile dealers in the local market
area as resources to determine the actual cost to purchase a comparable motor
vehicle. Specified that if there are no dealers in the local market area, the nearest
reasonable market may be used to determine cost.
4. Added language that specified that a vehicle's preloss condition should be
considered when determining whether a vehicle would have a higher cash value
in the local market area.
5. Added a provision that provided insurers the option of selecting a qualified
expert appraiser, selected and agreed upon by the parties, who will produce a
written nonbinding appraisal establishing the actual cash value of the vehicle's
preloss condition.