INSURANCE DEPARTMENT [31 PA. CODE CH. 65] Collision Loss Settlements [27 Pa.B. 3061] The Insurance Department (Department) proposes to delete §§ 65.11--65.14 pertaining to collision loss settlements to read as set forth in Annex A. The Department is publishing the deletion of the regulations as a proposed rulemaking to provide an opportunity for public comment. The Department proposes the deletion under the authority of sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. §§ 66, 186, 411 and 412) and the act of June 5, 1968 (P. L. 140, No. 78) (40 P. S. §§ 1008.1--1008.11) (Act 78). The regulations require an insurer to use actual cash value with certain adjustments as the standard for settling collision losses when adjusting total losses.
Purpose
The purpose of this rulemaking is to delete §§ 65.11--65.14, to eliminate outdated regulations which do not serve any compelling public purpose. These sections were adopted May 5, 1970, under the authority of Act 78, which governs cancellations, refusals to renew and refusals to write private passenger automobile insurance policies. The regulations define ''actual cash value,'' the amount an insurer must pay the insured for damages to the insured vehicle. The regulations require that collision losses involving a total loss be settled based upon the preloss fair market value of the damaged automobile plus the State Sales Tax on the cost of a replacement vehicle. The regulations further define actual cash value as the cost of repairing or replacing the damaged auto with another similar auto in the same physical condition, commonly known as replacement cost less depreciation.
After careful review, the Department proposes the deletions because they are no longer necessary. Collision loss settlements are covered more comprehensively in §§ 62.1--62.4 pertaining to motor vehicle physical damage appraisers (physical damage appraisers), adopted December 28, 1973. The collision loss settlement regulations duplicate the requirements in the physical damage appraisers regulations, which establish standards in § 62.3(f) (relating to applicable standards for appraisal) to be used to determine replacement value under the insurance policy provisions covering the total loss of a motor vehicle. The physical damage appraisers regulation in § 62.3(f)(5) also requires the applicable sales tax on the replacement cost of a motor vehicle to be included as part of the replacement value. Therefore, the deletion of these regulations does not lessen or alter the current regulatory requirements on the industry.
Fiscal Impact
The deletion of these regulations will not have any impact on costs associated with the Department, insurance companies, physical damage appraisers, political subdivisions or the general public.
Paperwork
The deletion of these regulations imposes no additional paperwork requirements on the Department, insurance companies, physical damage appraisers or the general public.
Persons Regulated
The deletion of these regulations applies to insurance companies and individuals who determine the value of a vehicle or cost of repairs to a damaged vehicle in this Commonwealth.
Contact Person
Questions or comments regarding the proposed rulemaking may be addressed in writing to Chester A. Derk, Jr., Chief, Market Conduct Division, Bureau of Enforcement, 1321 Strawberry Square, Harrisburg, PA 17120, (717) 783-2627, within 30 days following the publication of this notice in the Pennsylvania Bulletin.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on June 18, 1997, the Department submitted a copy of this proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Insurance and the Senate Committee on Banking and Insurance. In addition to submitting this proposed rulemaking, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1. A copy of this material is available to the public upon request.
If IRRC has objections to any portion of this proposed rulemaking, it will notify the Department within 30 days of the close of the public comment period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the regulations by the Department, the General Assembly and the Governor of objections raised.
LINDA S. KAISER,
Insurance CommissionerFiscal Note: 11-151. No fiscal impact; (8) recommends adoption.
Annex A TITLE 31. INSURANCE PART VII. PROPERTY, FIRE AND CASUALTY INSURANCE CHAPTER 65. MISCELLANEOUS PROVISIONS Subchapter B. [COLLISION LOSS SETTLEMENTS] (Reserved) § 65.11. [Background] (Reserved).
[Under the standard automobile collision loss insurance policy, the insurer contracts to pay the actual cash value of the automobile at the time of a total loss by the insured. For the most part, except with a car which is brand new at the time that it is ''totaled,'' the actual cash value will be somewhere in between the ''wholesale'' and the ''retail'' Red Book values, which vary between $400 and $500, regardless of the make of the automobile or its comparative age.]
§ 65.12. [Standard for settling collision losses is actual cash value] (Reserved).
[The Red Book values, as explained in § 65.11 (relating to background), shall be used by insurance companies writing automobile collision insurance as a guide only, recognizing that the Insurance Department insists that ''totaled'' collision losses be adjusted on the basis of fair market value plus the State tax on the cost of a replacement vehicle.]
§ 65.13. [Definition of actual cash value] (Reserved).
[When used in this subchapter, the term actual cash value is theoretically the cost of repairing or replacing the damaged property with other property of like kind and quality in the same physical condition, commonly defined as replacement cost less depreciation.]
§ 65.14. [Notice to claims forces] (Reserved).
[The provisions of this subchapter shall be brought to the attention of the claims force of each insurance company, including the home office and the field offices.]
[Pa.B. Doc. No. 97-1029. Filed for public inspection June 27, 1997, 9:00 a.m.]
