RULES AND REGULATIONS OF THE STATE OF NEW YORK TITLE

RULES AND REGULATIONS OF THE STATE OF NEW

YORK

TITLE 11. INSURANCE DEPARTMENT

Chapter IX — UNFAIR TRADE PRACTICES

Part 216. Unfair Claims Settlement Practices and Claim

Cost Control Measures

(Regulation 64)

11 NYCRR 216.0 Preamble

(a) Section 2601 of the Insurance Law prohibits insurers doing business in this

state from engaging in unfair claims settlement practices and provides that, if any

insurer performs any of the acts or practices proscribed by that section without just

cause and with such frequency as to indicate a general business practice, then those

acts shall constitute unfair claims settlement practices. This Part contains claim

practice rules which insurers must apply to the processing of all first-and third-party

claims arising under policies subject to this Part. In addition, specific rules are provided

for the processing of first-party motor vehicle physical damage claims and third-party

property damage claims arising under motor vehicle liability insurance contracts.

(b) This Part is issued for the purpose of defining certain minimum standards which,

if violated without just cause and with such frequency as to indicate a general business

practice, would constitute unfair claims settlement practices. This Part is not exclusive,

and other acts, not herein specified, may also be found to constitute such practices.

of this Part.

(d) Section 3412 of the Insurance Law has been implemented by section 216.8 of

this Part.

(e) Claim practice principles to be followed by all insurers:

(1) Have as your basic goal the prompt and fair settlement of all claims.

(2) Assist the claimant in the processing of a claim.

(3) Do not demand verification of facts unless there are good reasons to do so.

When verification of facts is necessary, it should be done as expeditiously as

possible.

(4) Clearly inform the claimant of the insurer's position regarding any disputed

matter.

(5) Respond promptly, when response is indicated, to all communications from

insureds, claimants, attorneys, and any other interested persons.

(6) Every insurer shall distribute copies of this regulation to every person

directly responsible for the supervision, handling and settlement of claims subject

to this regulation, and every insurer shall satisfy itself that all such personnel are

thoroughly conversant with, and are complying with, this regulation.

History

Sec. filed Dec. 5, 1972; amd. filed Jan. 14, 1975; repealed

new filed May 12, 1982; amd. filed Sept. 4, 1984 eff. Oct. 1,

1984.

11 NYCRR 216.1 Definitions

The definitions set forth in this section shall govern the construction of the terms used

in this Part.

(a) Agent shall mean any person, firm, association, or corporation authorized to

act as the representative of an insurer and licensed pursuant to the provisions of article

21 of the Insurance Law. With respect to group life and group accident and health

policies, the group policyholder shall be the agent of the insurer to the extent such

policyholder has been authorized to act on behalf of such insurer.

(b) Claimant shall mean any person who attempts to obtain a benefit from an

insurer.

whether to accept or reject a claim.

(d) Business day shall mean a day other than Saturday, Sunday or a New York

State legal holiday.

(e) Notice of claim shall mean any notification, whether in writing or otherwise, to

an insurer or its agent, by any claimant who reasonably apprises the insurer of the

facts pertinent to a claim.

History

Sec. filed Dec. 5, 1972; repealed new filed May 12, 1982; amd.

filed Sept. 4, 1984 eff. Oct. 1, 1984.

11 NYCRR 216.2 Applicability

This Part shall apply to all insurers licensed to do business in this state.

(a) It shall not be applicable to policies of workers' compensation insurance issued

pursuant to the provisions of section 1113(a)(15) of the Insurance Law; credit

insurance issued pursuant to the provisions of section 1113(a)(17); title insurance

issued pursuant to the provisions of section 1113(a)(18); inland marine insurance

issued pursuant to the provisions of section 1113(a)(20); unless such insurance is

subject to the provisions of section 3425 of the Insurance Law; and ocean marine

insurance issued pursuant to the provisions of section 1113(a)(20) and (21).

(b) Subdivisions (a) and (b) of section 216.6 of this Part shall not be applicable to

policies of life insurance written pursuant to the provisions of section 1113(a)(1) of

the Insurance Law. Subdivision (b) of section 216.6 of this Part shall not be applicable

to accident and health policies written pursuant to the provisions of section 1113(a)(3)

and the provisions of article 43 of the Insurance Law.

not be applicable to policies of accident and health insurance written pursuant to the

provisions of section 1113(a)(3) and the provisions of article 43 of the Insurance Law,

where the claimant is neither a policyholder, a certificate holder under a policy of group

insurance, nor a relative or member of the household of such policy or certificate

holder.

(d) Subdivision (b) of section 216.3, subdivision (b) of section 216.4 and

subdivision (a) of section 216.5 of this Part shall not be applicable to policies of

insurance where the claimant is represented by a public adjuster or a person acting in

the capacity of a public adjuster pursuant to the provisions of article 21 of the

Insurance Law.

(e) This Part shall also apply to an unauthorized insurer with respect to a group

policy issued pursuant to section 3455 of the Insurance Law.

History

Sec. filed Dec. 5, 1972; amd. filed Jan. 14, 1974; repealed new

filed May 12, 1982; amd. filed Sept. 4, 1984 eff. Oct. 1, 1984;

emergency eff. 6-6-2017, expires 8-3-2017; emergency eff. 9-1-

2017, expires 10-30-2017; permanent eff. 10-25-2017; amd. 10-

25-2017.

11 NYCRR 216.3 Misrepresentation of policy provisions

(a) No insurer shall knowingly misrepresent to a claimant the terms, benefits, or

advantages of the insurance policy pertinent to the claim.

(b) No insurer shall deny any element of a claim on the grounds of a specific policy

provision, condition or exclusion unless reference to such provision, condition or

exclusion is made in writing.

does not include all amounts which should be included according to the claim filed by

the claimant and investigated by the insurer shall, provided it is within the policy limits,

be deemed to be a communication which misrepresents a pertinent policy provision.

History

Sec. filed Dec. 5, 1972; repealed new filed May 12, 1982 eff. Aug.

15, 1982.

11 NYCRR 216.4 Failure to acknowledge pertinent communications

(a) Every insurer, upon notification of a claim, shall, within 15 business days,

acknowledge the receipt of such notice. Such acknowledgment may be in writing. If

an acknowledgment is made by other means, an appropriate notation shall be made

in the claim file of the insurer. Notification given to an agent of an insurer shall be

notification to the insurer. If notification is given to an agent of an insurer, such agent

may acknowledge receipt of such notice. Unless otherwise provided by law or contract,

notice to an agent of an insurer shall not be notice to the insurer if such agent notifies

the claimant that the agent is not authorized to receive notices of claims.

(b) An appropriate reply shall be made within 15 business days on all other

pertinent communications.

investigate and resolve complaints filed with the Department of Financial Services and

to take action necessitated as a result of its complaint investigation findings. Such

internal department is to operate in a staff capacity to the entire company with

authority to question and change the position taken in individual instances or company

practices generally. Responsibility for such department is to be vested in a corporate

officer who is also to be entrusted with the duty of executing the Department of

Financial Services' directives. If the Department of Financial Services requests the

appearance of an insurer representative to discuss a pending matter, the individual

whom the company sends shall be authorized to make any determination warranted

after all the facts are elicited at such conference. Each insurer must furnish the

superintendent with the name and title of the corporate officer responsible for its

internal consumer services department.

(d) Every insurer, upon receipt of any inquiry from the Department of Financial

Services respecting a claim, shall, within 10 business days, furnish the department

with the available information requested respecting the claim.

(e) As part of its complaint handling function, an insurer's consumer services

department shall maintain an ongoing central log to register and monitor all complaint

activity.

History

Sec. filed Dec. 5, 1972; repealed, new filed May 12, 1982; amd.

filed Sept. 4, 1984 eff. Oct. 1, 1984; amd. 6-1-2013; amd. 8-1-

2013.

11 NYCRR 216.5 Standards for prompt investigation of claims

(a)(1) Every insurer shall commence an investigation of any claim filed by a

claimant, or by a claimant's authorized representative, within 15 business days of

receiving notice of claim. An insurer shall furnish to every claimant, or claimant's

authorized representative, a notification of all items, statements and forms, if any,

which the insurer reasonably believes will be required of the claimant, within 15

business days of receiving notice of the claim. A claim filed with an agent of an insurer

shall be deemed to have been filed with the insurer unless, consistent with law or

contract, such agent notifies the person filing the claim that the agent is not authorized

to receive notices of claim.

(2)(i) Notwithstanding paragraph one of this subdivision, the provisions of this

paragraph shall apply to any claim filed on or after November 29, 2012 for loss,

damage, or liability for loss, damage, or injury, occurring from October 26, 2012

through November 15, 2012, in the counties of Bronx, Kings, Nassau, New York,

Orange, Queens, Richmond, Rockland, Suffolk or Westchester, including their

adjacent waters, with respect to:

(a) loss of or damage to real property;

(b) loss of or damage to personal property; or

(ii) Every insurer shall commence an investigation of any claim filed by a

claimant, or by a claimant's authorized representative, within six business days

of receiving notice of claim. If the insurer wishes its investigation to include an

inspection of the damaged or destroyed property, the inspection, whether

performed by the insurer, an independent adjuster, or other representative of

the insurer, must occur within the time frames specified in this paragraph.

(iii) An insurer shall furnish to every claimant, or claimant's authorized

representative, a written notification detailing all items, statements and forms,

if any, that the insurer reasonably believes will be required of the claimant, within

six business days of receiving notice of the claim.

(iv) A claim filed with an agent of an insurer shall be deemed to have been

filed with the insurer unless, consistent with law or contract, the agent notifies

the person filing the claim that the agent is not authorized to receive notices of

claim.

(v) Where necessary to protect health or safety, a claimant may commence

immediate repairs to heating systems, hot water systems, and necessary

electrical connections, as well as exterior windows, exterior doors, and, for minor

permanent repairs, exterior walls, in order to enable property to retain heat, and

any policy requirement that the policyholder exhibit the remains of the property

may be satisfied by the policyholder submitting proof of loss documentation of

the damaged or destroyed property, including photographs or video recordings;

material samples, if applicable; and inventories, as well as receipts for any

repairs to or replacement of property. This subparagraph does not apply to

claims under flood policies issued under the national flood insurance program.

(b) Where there is a reasonable basis, supported by specific information available

for review by Department of Financial Services examiners, that the claimant has

fraudulently caused or contributed to the loss, the insurer is relieved from the

requirements of this Part. The provisions of this Part are suspended for the period

required to investigate the alleged fraudulent aspects of the claim. The insurer must

submit the report required by Part 86 (Criminal Investigations Unit) of this Title when

an insurer determines that a loss is suspect.

History

Sec. filed Dec. 5, 1972; repealed, new filed May 12, 1982 eff. Aug.

15, 1982; emergency eff. 11-29-2012, expires 2-27-2013;

emergency eff. 2-26-2013, expires 5-26-2013; amd. 6-1-2013;

emergency eff. 5-24-2013, expires 8-21-2013; permanent eff. 8-

1-2013; amd. 8-1-2013.

11 NYCRR 216.6 Standards for prompt, fair and equitable settlements

(a) In any case where there is no dispute as to coverage, it shall be the duty of

every insurer to offer claimants, or their authorized representatives, amounts which

are fair and reasonable as shown by its investigation of the claim, providing the

amounts so offered are within policy limits and in accordance with the policy

provisions.

(b) "Actual cash value," unless otherwise specifically defined by law or policy,

means the lesser of the amounts for which the claimant can reasonably be expected

to:

(1) repair the property to its condition immediately prior to the loss; or

(2) replace it with an item substantially identical to the item damaged. Such

amount shall include all monies paid or payable as sales taxes on the item repaired

or replaced. This shall not be construed to prevent an insurer from issuing a policy

insuring against physical damage to property, where the amount of damages to be

paid in the event of a total loss to the property is a specified dollar amount.

proof of loss and receipt of all items, statements and forms which the insurer requested

from the claimant, the claimant, or the claimant's authorized representative, shall be

advised in writing of the acceptance or rejection of the claim by the insurer. When the

insurer suspects that the claim involves arson, the foregoing 15 business days shall

be read as 30 business days pursuant to section 2601 of the Insurance Law. If the

insurer needs more time to determine whether the claim should be accepted or

rejected, it shall so notify the claimant, or the claimant's authorized representative,

within 15 business days after receipt of such proof of loss, or requested information.

Such notification shall include the reasons additional time is needed for investigation.

If the claim remains unsettled, unless the matter is in litigation or arbitration, the

insurer shall, 90 days from the date of the initial letter setting forth the need for further

time to investigate, and every 90 days thereafter, send to the claimant, or the

claimant's authorized representative, a letter setting forth the reasons additional time

is needed for investigation. If the claim is accepted, in whole or in part, the claimant,

or the claimant's authorized representative, shall be advised in writing of the amount

offered. In any case where the claim is rejected, the insurer shall notify the claimant,

or the claimant's authorized representative, in writing, of any applicable policy

provision limiting the claimant's right to sue the insurer.

(d) The company shall inform the claimant in writing as soon as it is determined

that there was no policy in force or that it is disclaiming liability because of a breach

of policy provisions by the policyholder. The insurer must also explain its specific

reasons for disclaiming coverage.

(e) In any case where there is no dispute as to one or more elements of a claim,

payment for such element(s) shall be made notwithstanding the existence of disputes

as to other elements of the claim where such payment can be made without prejudice

to either party.

(f) Every insurer shall pay any amount finally agreed upon in settlement of all or

part of any claim not later than five business days from the receipt of such agreement

by the insurer or from the date of the performance by the claimant of any condition

set by such agreement, whichever is later, except as provided in section 331 of the

Insurance Law as respects liens by tax districts on fire insurance proceeds.

(g) Checks or drafts in payment of claims; releases.

No insurer shall issue a check or draft in payment of a first-party claim or any

element thereof, arising under any policy subject to this Part that contains any

language or provision that expressly or impliedly states that acceptance of such

check or draft shall constitute a final settlement or release of any or all future

obligations arising out of the loss. No insurer shall require execution of a release

on a first- or third-party claim that is broader than the scope of the settlement.

(h) Any notice rejecting any element of a claim involving personal property

insurance shall contain the identity and the claims processing address of the insurer,

the insured's policy number, the claim number, and the following statement

prominently set forth:

"Should you wish to take this matter up with the New York State Department of Financial

Services, you may file with the Department either on its website at

http://www.dfs.ny.gov/consumer/fileacomplaint.htm or you may write to or visit the

Consumer Assistance Unit, Financial Frauds and Consumer Protection Division, New York

State Department of Financial Services, at: One State Street, New York, NY 10004; One

Commerce Plaza, Albany, NY 12257; 1399 Franklin Avenue, Garden City, NY 11530; or

Walter J. Mahoney Office Building, 65 Court Street, Buffalo, NY 14202."

History

Sec. filed Dec. 5, 1972; amd. filed Apr. 5, 1973; amd. filed Jan. 14, 1975;

repealed, new filed May 12, 1982; amd. filed Sept. 4, 1984 eff. Oct. 1,

1984; amd. filed April 7, 1997 eff. April 23, 1997; amd. filed Jan. 16, 1998

eff. Feb. 4, 1998; amd. filed Feb. 14, 2003 eff. March 5, 2003; amd. filed

June 3, 2003 eff. June 18, 2003; amd. 3-1-2013; emergency eff. 2-26-

2013, expires 5-26-2013; permanent eff. 6-1-2013; amd. 6-1-2013;

emergency eff. 5-24-2013, expires 8-21-2013; permanent eff. 2-1-2017;

amd. 2-1-2017.

11 NYCRR 216.7 Standards for prompt, fair and equitable settlement of motor

vehicle physical damage claims

This section is applicable to claims arising under motor vehicle collision and

comprehensive coverages. The provisions of this Part shall continue to be applicable

to these claims, except to the extent that such provisions are inconsistent with the

specific provisions of this section. The sections of this Part that do not apply at all to

motor vehicle physical damage claims are sections 216.2(b) — (d), 216.6(c), (h), and

216.9 of this Part.

(a) The following shall govern the construction of the terms used in this section:

(1) Agreed price shall mean the amount agreed to by the insurer and the

insured, or their representatives, as the reasonable cost to repair damages to the

motor vehicle resulting from the loss, without considering any deductible or other

deductions.

(2) Designated representative (DR) shall mean an insured's broker of record or

an insured's intended repair shop designated by the insured to represent the

insured shop in negotiations with the insurer in an attempt to settle the claim. Such

designated representative may legally act on the insured's behalf. If the designated

representative is the insured's intended repair shop, such repair shop, if located

within New York state, must be registered pursuant to the provisions of the Motor

Vehicle Repair Shop Registration Act (article 12-A, Vehicle and Traffic Law) and may

only represent the insured in negotiation of the amount necessary to repair the

insured's damaged vehicle. The designation form must contain the repairer's

registration number.

(3) Motor vehicle shall have the meaning ascribed in section 311 of the Vehicle

and Traffic Law.

(4) Substantially similar vehicle shall mean a vehicle of the same make, model,

year and condition, including all major options of the insured vehicle. Mileage must

not exceed that of the insured vehicle by more than 4,000 miles or 10 percent of

the mileage on the vehicle at the date of loss, whichever is greater.

(5) Business day shall mean a day other than Saturday, Sunday or a New York

state legal holiday.

(6) Crash part means a part of a motor vehicle, which:

(i) is made of sheet metal, plastic, fiberglass or similar material, including a

door, fender, panel, bumper, hood, floor or trunk lid, but not including windows

or hubcaps; and

(ii) constitutes or provides support for the motor vehicle's exterior.

(7) Original equipment manufacturer or OEM means a motor vehicle

manufacturer or distributor that produces or markets, under its own name, crash

parts for use in motor vehicles that it manufactures or distributes under its own

name.

(8) Nonoriginal equipment manufacturer or non-OEM means a manufacturer or

distributor (including any entity supplying the required warranty other than a

manufacturer) that produces or markets, under its own name, crash parts for use

in motor vehicles that it does not manufacture or distribute.

(9) Waste material means material defined as a liquid toxic waste or liquid

hazardous waste material under federal or New York state environmental laws or

regulations.

(10) Local market area shall mean a 100-mile radius, limited to within the United

States, of the place of principal garagement of the insured's motor vehicle.

(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.

(2) Before negotiating a loss with the insured's designated representative, the

insurer must receive written proof of such designation, properly executed and

signed by the insured. The designated representative form shall be accepted by the

insurer or its representative when it is offered by either the designated

representative or the insured. Prior to negotiating a loss with a repair shop, the

insurer shall ascertain the repair shop registration number and the currency of the

registration. The insurer shall not knowingly negotiate a loss with an unregistered

repair shop.

(3) The person inspecting the damaged vehicle on behalf of the insurer must be

licensed or authorized, under article 21 of the Insurance Law, to negotiate the loss

with the insured or the insured's designated representative. At the time of initial

inspection, the person chosen by the insurer to inspect damages must attempt to

enter into negotiations, involving the extent of damages, manner of repair and

number of hours to repair the damaged vehicle, with the designated representative

or, if no designated representative, the insured, in accordance with the following

procedures:

(i) at the time of inspection, the insurer shall furnish a copy of its estimate,

which at a minimum, must indicate the extent of known damages and manner

of repair; or

(ii) if the insurer utilizes electronic data processing equipment to generate its

repair estimate the insurer shall furnish, at the time of inspection, its estimate

or a copy of its worksheet which at a minimum, must indicate the extent of

known damages and manner of repair or, in the alternative, such insurer may

hand-deliver to the insured's designated representative or, if no designated

representative, the insured, no later than 24 hours following the inspection, a

copy of the insurer's detailed written estimate of the cost of repairing the

damages resulting from the loss, specifying all appropriate deductions.

Within the aforesaid six-business-day period, the insured's designated

representative or, if no designated representative, the insured, shall, in all events,

receive from the insurer a copy of the insurer's detailed written estimate of the cost

of repairing the damages resulting from the loss, specifying all appropriate

deductions.

(4) The insurer's repair estimate shall include, as a separate line item, the

reasonable cost for proper disposal of waste material generated by painting the

motor vehicle or crash part, in the following manner (or using another method that

is acceptable to the superintendent as functionally equivalent):

(i) the cost per paint hour shall be calculated by dividing the repair shop's

annual disposal fees for such waste material, after adjusting for reclaiming or

recycling by the repair shop, by the number of hours expended annually to paint

vehicles;

(ii) the reasonable cost for proper disposal of the waste material shall be

calculated by multiplying the number of hours estimated to paint the vehicle by

the cost by paint hour;

(iii) presentation of the manifest and invoice documenting a repair shop's

disposal of and disposal cost for hazardous waste may be required by an insurer

as a condition for this separate line itemization, and the failure of the repair shop

to provide such documentation shall relieve the insurer from any consideration

or inclusion of such disposal cost on an itemized basis within the repair estimate;

(iv) the reasonable cost shall not exceed the prevailing cost for such disposal

in the geographic area of such repair; and

(v) a new repair shop may use the prevailing cost for disposal of hazardous

waste in its geographic area during its first year in business.

(5) If the insurer's repair estimate is based upon the use of any non-OEM crash

part:

(i) the estimate shall specify the non-OEM or non-OEM supplier;

(ii) the insurer shall not, without consent of the insured or the insured's

designated representative, specify non-OEM crash parts from more than three

different suppliers for any one repair;

(iii) the crash part shall equal or exceed the comparable OEM crash part in

terms of fit, form, finish, quality and performance;

(iv) the crash part must be warranted by the non-OEM at least to the extent

and duration as the comparable OEM crash part;

(v) the insurer shall specify only certified crash parts, in regard to any part

that has been duly certified by a qualified certifying entity acceptable to the

superintendent;

(vi) if the crash part has not been certified by a qualified certifying entity

acceptable to the superintendent, the non-OEM must issue a written warranty,

for at least the period of the insured's ownership of the vehicle, that the crash

part equals or exceeds the comparable OEM crash part in terms of fit, form,

finish, quality and performance; and

(vii) the insurer shall cause the damaged vehicle to be restored to its pre-

loss condition consistent with the non-OEM warranty, at no additional cost to the

insured and within a reasonable time, if the non-OEM fails to honor its warranty

required in subparagraph (iv) or (vi) of this paragraph.

(6) In determining whether a certifying entity is qualified and acceptable for

purposes of paragraph (5) of this subdivision, the superintendent shall consider the

extent to which the entity:

(i) has adopted written standards containing conditions to be fulfilled by a

manufacturer of crash parts;

(ii) tests, or contracts with an independent testing organization that tests,

crash parts, using suitable equipment and techniques;

(iii) administers its certification program in a nondiscriminatory manner

regarding any manufacturer or supplier of non-OEM crash parts;

(iv) provides a system to determine that certified non-OEM crash parts

continue to conform with standards prescribed in subparagraph (5)(iii) of this

subdivision and, failing to so conform, to decertify and advise crash part users

of withdrawals of certification for any such part;

(v) provides mechanisms for quickly receiving inquiries and promptly

resolving disputes that arise under the program in regard to consumers, insurers

or repair shops;

(vi) provides a means of identifying each certified non-OEM crash part and

provides a system of security that guards against misuse of the identification;

(vii) provides updated lists of certified non-OEM crash parts on at least a

quarterly basis; and

(viii) provides the superintendent with an annual report, and such other

reports as the superintendent may require, highlighting any significant

developments, problems or changes relating to certification procedures or

requirements.

(7) Negotiations must be conducted in good faith, with the basic goal of

promptly arriving at an agreed price with the insured or the insured's designated

representative. If the insured's intended repair shop is not a designated

representative of the insured, the insurer may also reach an agreement with that

repair shop on the cost to repair the damaged vehicle, but that agreement shall not

be binding upon the insured or the designated representative. Early in negotiations,

the insurer must inform the insured's designated representative or, if there is no

designated representative, the insured of all deductions that will be made from the

agreed price. If an insurer shall require a proof of loss, its offer shall be

communicated to the insured via a proof of loss. The insurer shall also communicate

the offer to the designated representative.

(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) If a second inspection of the vehicle is required by the insurer in order to

evaluate open items on the original estimate, or hidden damage discovered upon

commencement of repairs, such inspection shall be performed within two business

days following the date of notice of additional or hidden damage from either the

insured or the DR. When repairs are sublet by the original repairer, thereby

necessitating a reinspection at a location other than the original repairer's location,

such reinspection must take place within four business days' notice, from either the

insured or the DR, of additional or hidden damage. At the time of the subsequent

inspection, the insurer shall furnish a copy of the insurer's detailed written estimate

of the cost of repairing the damages resulting from the loss, specifying all

appropriate deductions.

(10) If upon notification of a loss, the insurer, because of the minor amount of

the loss as reported by the insured, requests an estimate of repairs from the insured

in lieu of a physical inspection, such a request must be made within three business

days of the notice of claim. The insured must receive notification that, upon receipt

of the estimate, the insurer may for good reasons (e.g., estimate far exceeded

original advice to insurer) elect to inspect the vehicle. Such inspection must be

made within four business days following the receipt of the estimate at the claim

processing office of the insurer. Such inspection shall be subject to the provisions

of this section, except that the six-business-day forfeiture-of-inspection period

specified in paragraph (8) of this subdivision shall become applicable after the four

business days. A good faith offer of settlement, sufficient to repair the vehicle to its

condition immediately prior to the loss, must be made to the designated

representative and, it may also be made to the insured within three business days

of the receipt of the inspection and/or estimate. If there is no designated

representative, the offer shall be made to the insured within the three-day period.

If the insurer does not perform its own physical inspection, it is nevertheless bound

by all the applicable requirements of this Part.

(11) Deductions for betterment and/or depreciation are permitted only for parts

normally subject to repair and replacement during the useful life of the insured

motor vehicle. Deductions for betterment and/or depreciation shall be limited to the

lesser of:

(i) an amount equal to the proportion that the expired life of the part, to be

repaired or replaced, bears to the normal useful life of that part; or

(ii) the amount by which the resale value of the motor vehicle is increased

by the repair or replacement. Calculations for betterment, depreciation and

normal useful life must be included in the insurer's claim file.

(12) Deductions for previous damage or prior condition of the motor vehicle

must be measurable, discernible, itemized and specified as to dollar amount, and

such deductions must be detailed in the claim file. Such deductions shall be limited

to the amount by which the resale value of the motor vehicle is increased by the

elimination of the previous damage or the correction of the prior condition.

(13) Estimates of repairs prepared by insurers or their representatives shall

contain the following information at a minimum: identity of policyholder and/or

owner/claimant; owner/claimant's address and telephone number; identity of

insurer, including name, address, license number and telephone number of

adjuster; year, make, model, body style, mileage, VIN, license number, color and

condition of the damaged vehicle. The estimate must also contain the claim number,

the date of accident and the date the vehicle was inspected. Each item of damage

must be detailed as to the paint, parts and labor hours it will require to repair that

particular item. If the appraisal is made at a repair shop, the registration number

of the shop must be included on the estimate form.

(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.

(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.

(15) 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 files a signed section 2610 of the Insurance Law

Disclosure Statement (NYS APD 1-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 file 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.

(16) Salvage vehicle branding. (i) This paragraph shall be applicable to claims

involving vehicles that are eight model years or newer on the date of the loss.

(ii) If the insurer determines that the cost to repair a damaged vehicle

exceeds seventy-five percent of the vehicle's actual cash value and if the insurer

does not take possession of the vehicle for disposition as salvage, the insurer

shall require the vehicle owner to provide the title to the insurer. The insurer

may withhold the entire claim payment, but must withhold at least fifty percent

of its claim payment, after application of any deductible, until receipt of the title.

The vehicle owner shall be advised by the insurer that the title is being requested

in order to comply with subdivision (c) of Section 20.20 of the Regulations of the

Commissioner of Motor Vehicles and that the title will be branded as "REBUILT

SALVAGE" and will be returned to the owner by the Department of Motor

Vehicles.

(iii) As soon as reasonably practicable, but no later than ten business days

after receipt of the title from the vehicle owner, the insurer shall forward the title

to the New York State Department of Motor Vehicles, Title Bureau, Empire State

Plaza, Albany, NY 12228.

(iv) For the purpose of determining the vehicle's actual cash value pursuant

to this paragraph, an insurer shall use the methods prescribed in subparagraph

(c)(1)(i) or (iii) of this section; the value of repair parts shall be determined by

using the current published retail cost of the original equipment manufacturer

parts or the actual retail cost of the repair parts included on the insurer's repair

estimate; and the labor cost shall be computed based upon hourly labor rate and

time allocations that are consistent with the insurer's repair estimates in the

community where the repairs are performed.

(17) The insurer must mail or hand-deliver its payment to the insured or the

designated representative within five business days after the insured has accepted

the insurer's offer, or three business days after the receipt of a completed proof of

loss.

(18) The insured shall have the right to receive the proceeds of any settlement

in accordance with policy provisions. However, if the insured agrees and this

agreement is documented in the claim file, the insurer may make the check or draft

payable to the insured and the lienholder and/or the insured's designated repairer.

An insurer may not condition payment of a loss upon repair of the automobile or

receipt of a completed Certification of Automobile Repairs.

(19) The following additional standards shall be applicable to the settlement of

private passenger automobile physical damage claims:

(i) Subsequent to payment of the claim, the insurer, in accordance with the

provisions of section 3411(i) of the Insurance Law, may request that the

automobile be made available for inspection, whether or not the automobile is

repaired. The inspection shall be conducted at a time and place reasonably

convenient to the insured. The inspection report shall be retained in the insurer's

claim file.

(ii) An insurer shall request submission of a Certification of Automobile

Repairs (NYS APD 2) as contained in section 216.12 of this Part, signed and

certified by the insured and the automobile repairer, under penalties of perjury,

stating whether all items allowed by the insurer have been repaired and, if not,

that repairs were made in accordance with the repairer's invoice. This form

together with a postage-paid return envelope, shall be given to the insured or

the insured's designated representative by the insurer during the course of

negotiation of the settlement amount.

(iii) The provisions of section 3411(i) of the Insurance Law, with respect to

certification and repair invoices, do not apply where the amount of damage to

the insured automobile is less than the deductible applicable to the policy.

(20) Pursuant to the requirements of section 3411(l) of the Insurance Law,

whenever an insurer discovers any evidence of overcharging, improper repairs or

adjustments, or any other wrongdoing by a motor vehicle repair shop, including its

failure to permit an inspection of the repaired automobile, to sign the Certification

of Automobile Repairs or to provide the insured with an itemized invoice, such

evidence shall be forwarded, within 30 days, to:

New York State Department of Motor Vehicles Division of Vehicle Safety

Governor Nelson A. Rockefeller Empire State Plaza Albany, NY 12228

The insurer shall thereafter cooperate fully with the Department of Motor

Vehicles in its investigation.

(1) If the insurer elects to make a cash settlement, its minimum offer, subject

to applicable deductions, must be one of the following:

(i) The average of the retail values for a substantially similar vehicle as listed

in two valuation manuals current at the date of loss and approved by this

department. Manuals approved for use are — The Redbook, published by

National Market Reports Inc., and The N.A.D.A. Official Used Car Guide,

published by the National Automobile Dealers Used Car Guide Company. The use

of other manuals may be approved by this department upon demonstration of

need and suitability. If it is evident that an option has not been considered in

either or both of the above valuation manuals, the insurer shall consider the

value, if any, of such option in arriving at the vehicle's value and shall utilize the

best available method to value such option. The insurer may deduct documented,

reasonable dealer preparation charges, up to $100, from the average of the retail

values. The insurer shall provide to the insured, no later than the date of

payment of the claim, a detailed copy of its calculation of the insured vehicle's

total loss value, including the valuation of options which are not considered in

the base price of the vehicle.

(ii) A quotation for a substantially similar vehicle, obtained by the insurer

from a qualified dealer located reasonably convenient to the insured. A

reasonable location shall be within 25 miles of the place of principal garagement

of the motor vehicle. The substantially similar available vehicle must remain

available for purchase by the insured for a period of three calendar days

subsequent to receipt of notice of its availability by the insured, and the insured

must be able to purchase the substantially similar vehicle at the quoted dealer

for the insurer's cash offer plus applicable deductions. The insurer must maintain

in its claim file the dealer's name and location, the vehicle identification number,

the dealer stock number, the mileage and the major options for the substantially

similar vehicle which was the basis of its quote. The notice to the insured of the

availability of a substantially similar vehicle must be sent by certified mail, return

receipt requested, or be a sound-recorded conversation reflecting the date of

notice. The three calendar days commence on the date the insured acknowledges

receipt of notice. The insured need not purchase the vehicle used as the basis of

the insurer's quotation, since the quotation merely serves as a basis for the

insurer's offer. The foregoing period is satisfied at the point an insured physically

verifies the existence of the substantially similar available vehicle used as the

basis of the insurer's quotation. Should the insurer's research of substantially

similar vehicles determine that the retail values contained in the valuation

manuals, prescribed in subparagraph (i) of this paragraph, are inadequate to

purchase a substantially similar vehicle, the insurer's offer should be the amount

determined by such research.

(iii) A quotation obtained from a computerized database, approved by the

superintendent, that produces statistically valid fair market values for a

substantially similar vehicle, within the local market area that meets all the

following minimum criteria:

(a) it shall produce values for at least eighty-five percent of all makes and

models of private passenger automobiles, as defined in section 67.1(a) of this

Title, for the last 15 model years, and shall take into account the values of all

major options for such vehicles;

(b) it shall rely upon values derived from licensed dealers, which have

minimum sales of 100 motor vehicles per year in the local market area for all

vehicles of seven model years or less of age, and be based upon the physical

inventory of vehicles sold within the 90 days prior to the loss and vehicles

which are available; and

automobiles when there is insufficient data or inventory available from

licensed dealers to ensure statistically valid local market area values.

(iv) If the method used in subparagraph (i), (ii) or (iii) of this paragraph

would result in a settlement offer greater than the purchase price plus the cost

of substantiated improvements paid by the insured for a vehicle purchased within

the 180 calendar days prior to date of loss, the insurer's offer of settlement may

be limited to the purchase price, plus the cost of any substantiated

improvements, less the deductible. This method of settlement shall not be

applicable to motor vehicles acquired by the insured through a private sale or as

a gift. A private sale is one in which the seller does not engage in the sale of

motor vehicles as an occupation.

(v) If it is not possible to value the damaged motor vehicle by using an

alternative method as described in subparagraph (i), (ii), (iii) or (iv) of this

paragraph, the insurer shall determine the retail value by the best available

method and shall explain to the insured how its offer was calculated.

(2) If the insurer elects to replace the vehicle, the replacement vehicle must be

an immediately available, substantially similar vehicle that is both furnished and

paid for by the insurer, subject to the deductible if any.

(3) A private passenger automobile of the current model year means a current

model year automobile that has not been superseded in the marketplace by an

officially introduced succeeding model, or an automobile of the previous model year

purchased new within 90 days prior to the date of loss. If the insured vehicle is a

private passenger automobile of the current model year, the insurer shall pay to

the insured the reasonable purchase price to the insured on the date of loss of a

new identical vehicle, less any applicable deductible and an allowance for

depreciation in accordance with the schedule below, except where the utilization of

this method of settlement would result in a lower claim payment as compared with

the utilization of the methods described in subparagraphs (1)(i), (ii) and (iii) of this

subdivision.

DEPRECIATION SCHEDULE

Purchase Price

Depreciation

Per Mile

Up to $10,000

$.15

$10,001 to $15,000

.20

$15,001 to $20,000

.25

$20,001 to $25,000

.30

$25,001 to $30,000

.37

$30,001 to $35,000

.45

More than $35,000

.53

(4) Right of recourse. If, within 35 calendar days after mailing of the claim

payment, the insured notifies the insurer in writing that the insured cannot purchase

a comparable vehicle for the market value, as determined under the provisions of

subparagraph (1)(i), (ii), (iii) or (v) or paragraph (3) of this subdivision, the insurer

shall reopen its claim file and shall offer, in its discretion and subject to applicable

deductions, one of the following options to the insured:

(i) the insurer shall identify and offer for settlement an amount sufficient to

purchase a substantially similar vehicle, as provided in subparagraph (1)(ii) of

this subdivision; or

(ii) the insurer shall pay the insured the difference between the amount of

its claim payment and the cost of a substantially similar vehicle, as provided in

subparagraph (1)(ii) of this subdivision, located by the insured, or the insurer,

upon consent of the insured, may purchase that vehicle for the insured.

(5) The insurer shall not be required to take action under paragraph (4) of this

subdivision if its documentation to the insured at the time of its final offer included

written notification of the availability of a substantially similar vehicle, as provided

in subparagraph (1)(ii) of this subdivision, which shall have been available for at

least three calendar days subsequent to the insured's receipt of that offer. The

documentation shall include the vehicle identification number, the stock number or

order number.

(6) If the insurer in the process of adjusting a total loss makes a deduction for

the salvage value of the insured vehicle, the insurer must furnish the insured, upon

the insured's request, with the name and address of a licensed or certified salvage

dealer or dismantler who will purchase the salvage for the amount deducted with

no additional charges to the insured by the salvage dealer or dismantler.

(7) All applicable provisions of subdivision (b) of this section ("adjustment of

partial losses") also shall apply to the adjustment of total losses, except that the

insurer shall be allowed an additional five business days to comply with the

requirements of paragraph (1) of subdivision (b) of this section. In the case of an

unrecovered theft loss, except as provided in section 216.8 of this Part, the insurer

shall make its offer for the total loss no later than the 25th calendar day following

the notice of loss, if the insured has provided all information that has been

requested by the insurer that is necessary to value the claim. If the insured has not

provided such information by the 25th calendar day following the notice of loss, the

insurer shall make its offer no later than the 5th business day following receipt of

such information.

(8) This subdivision does not prohibit an insurer from issuing a stated value

policy insuring against physical damage, where the amount of damages to be paid

in the event of a total loss is a specified dollar amount.

(9) The superintendent shall review the operation and efficacy of the total loss

provisions of this subdivision at least every five years.

(d) Unreasonable delay.

(1) Unless clear justification exists, no more than 20 percent of a representative

sample of the physical damage claims selected by Department of Financial Services

examiners at any office or offices of the insurer shall have a payment period in

excess of 30 calendar days. A payment period is the period between the date of

receipt of notice of loss by the insurer and:

(i) the date the settlement check is mailed; or

(ii) the date on which the damaged motor vehicle is replaced by the insurer.

If an insurer is in violation of this overall standard, then each such claim in excess

of 30 calendar days may be treated as a separate violation.

(2) If any element of a physical damage claim remains unresolved more than

30 calendar days from the date of receipt of notice by the insurer, the insurer shall

provide the insured with a written explanation of the specific reasons for delay in

the claim settlement. Unless the matter is in litigation, an updated letter of

explanation shall be sent every 30 calendar days thereafter until all elements of the

claim are either honored or rejected.

(3) Any letter of explanation or rejection of any element of a claim shall contain

the identity and claims processing address of the insurer, the insured's policy

number, the claim number and the following statement, prominently set forth:

"Should you wish to take this matter up with the New York State Department

of Financial Services, you may file with the Department either on its website

at http://www.dfs.ny.gov/consumer/fileacomplaint.htm or you may write to

or visit the Consumer Assistance Unit, Financial Frauds and Consumer

Protection Division, New York State Department of Financial Services, at: One

State Street, New York, NY 10004; One Commerce Plaza, Albany, NY 12257;

1399 Franklin Avenue, Garden City, NY 11530; or Walter J. Mahoney Office

Building, 65 Court Street, Buffalo, NY 14202."

(e) Repair estimates. If an insurer requires that its insured obtain an estimate or

estimates of vehicle damage, the reasonable cost, if any, of such estimates shall be

borne by the insurer.

(f) Loss of use. In the event of the theft of the entire vehicle, it shall be the duty

of the insurer at the time of notification of loss to advise the insured of his right under

the policy to be reimbursed for transportation expenses. Such notification must be

confirmed in writing immediately after receipt of notice of theft. All conditions and

benefits related to this coverage as stated in the policy must be contained in the

notification to the insured.

(g) Subrogation agreements.

(1) Where an insured has received payment under a physical damage coverage

that is subject to a deductible, the insured shall share, pro rata, with the insurer

any net recovery received by the insurer from third parties. Within 30 calendar days

of such recovery the insurer must mail or hand-deliver to the insured its payment

for the insured's pro rata share of the recovery.

(2) Net recovery shall be the total recovery less the insurer's allocated loss

adjustment expenses attributable to such recovery. The formula for computing net

recovery and the insured's share of recovery of the deductible may be stated as

follows:

(i) TOTAL RECOVERY - ALLOCATED LOSS ADJUSTMENT EXPENSES = NET

RECOVERY

DEDUCTIBLE

TOTAL LOSS × NET RECOVERY = INSURED'S SHARE OF NET RECOVERY

Application of Formula: Assume a loss of $500 subject to a $100 deductible

with $50 in allocated loss adjustment expenses:

(a)

If there is full recovery of $500:

computation of net recovery:

$500 - $50 = $450

computation of insured's share of recovery:

$100/$500 × $450 = $90

(b)

If there is a partial recovery of $300:

computation of net recovery:

$300 - $50 = $250

computation of insured's share of recovery:

$100/$500 × $250 = $50

(3) Unless the insurer returns its insured's full deductible, it shall attempt to

effect full recovery in clear liability cases and shall not enter into any intercompany

agreements that provide for the acceptance of lesser amounts on a formula basis.

(4) If an insurer has paid a physical damage claim that is subject to a deductible

and it has elected to pursue its subrogation claim, the insurer shall promptly

attempt to effect recovery. If a dispute arises between two or more insurers

regarding the subrogation recovery, and the insurers are unable to resolve it, the

insurer seeking recovery shall submit the dispute to binding arbitration or a court

action shall be commenced no later than 180 calendar days following the payment

of the claim to its insured.

(5) If an insurer has paid a physical damage claim that is subject to a deductible

and it is pursuing its subrogation claim, the insurer shall notify its insured in writing

of the status of its claim 120 calendar days after the date of the claim payment to

its insured. An updated status letter shall be sent every 120 calendar days

thereafter until the claim is either honored or rejected.

(6) If an insurer has paid a physical damage claim that is subject to a deductible

and it elects not to pursue its subrogation claim where the possibility of recovery

exists, the insurer shall so notify its insured in writing within 60 calendar days after

it has paid the claim, except that the notification shall be given at least 30 days

prior to the running of any applicable statute of limitations or period required for

notice of claim. If an insurer does not notify its insured within the time periods

prescribed above and the statute of limitations or period required for notice of claim

has expired, the insurer shall forthwith remit to its insured the full amount of the

insured's deductible.

(h) Referral of insured to the "at fault" party. There shall be no attempt to

discourage an insured from filing a physical damage claim nor shall an insurer

encourage its insured to assert a claim against a third party in lieu of filing a physical

damage claim under the insured's policy.

History

Sec. filed Jan. 14, 1975; amd. filed Oct. 7, 1977; repealed, new filed

May 12, 1982; amd. filed Sept. 4, 1984; amd. filed Dec. 31, 1984

eff. Jan. 1, 1985; amd. filed Mar. 30, 1993 eff. May 1, 1993; amd.

filed Oct. 19, 1995 eff. Nov. 8, 1995; amd. filed April 7, 1997 eff.

April 23, 1997; amd. filed Jan. 16, 1998 eff. Feb. 4, 1998; amd.

filed Aug. 11, 1999 eff. Sept. 15, 1999; amd. filed Feb. 14, 2003

eff. March 5, 2003; amd. filed June 3, 2003 eff. June 18, 2003; amd.

3-1-2013; amd. 6-1-2013; amd. 2-1-2017.

11 NYCRR 216.8 Verification and reporting requirements applicable to losses

arising under automobile physical damage policies and reporting of third party

property damage losses

(a) Preamble. The purpose of this section is to implement the provisions of section

3412 of the Insurance Law, which provides for measures to be applied by insurers and

a central organization engaged in loss prevention in order to prevent payment of

fraudulent claims arising under automobile physical damage policies. Such measures

shall include: reporting of data on private passenger automobiles involved in total

losses to a central organization engaged in loss prevention, as designated by the

superintendent; verification procedures to be applied by insurers prior to the payment

of total theft losses; restrictions on the insured's retention of salvage; restrictions and

procedures for insurer's disposition of salvage; the insurer's right to retrieve located

stolen or abandoned vehicles; and notification by insurers to law enforcement

agencies, when the insurer or the central organization suspects improper or fraudulent

action on the part of the insured, or others involved in the loss settlement process.

(b) Applicability. This section shall apply to all losses involving private passenger

automobiles of the current model year and the preceding six model years and older

private passenger automobiles with an actual cash value of $5,000 or more, prior to

the loss. A private passenger automobile shall mean a four-wheel private passenger

vehicle, station wagon, van, jeep-type vehicle, sport utility vehicle, or pickup truck.

superintendent. For purposes of this Part, "central organization" shall also include any

entity that is acceptable to the superintendent with which the central organization

contracts to assist in executing its responsibilities pursuant to this Part. All insurers

licensed to write automobile physical damage insurance in this State are hereby

required to become members of the central organization, for the purpose of compliance

with this section.

(d) Reporting and follow-up requirements. Insurers shall report all private

passenger automobiles involved in losses to the central organization, as follows:

(1) All total theft losses shall be reported immediately, but no more than two

business days following notice of claim, as defined in section 216.1(d) of this Part.

If the insurer has not received any acknowledgment or communication from the

central organization within 10 calendar days following its submission of the total

theft report to the central organization, the insurer shall immediately communicate

with the central organization to determine the status of its report.

(2) All other first- and third-party losses, however sustained, where damage to

the claimant's vehicle exceeds $2,500 shall be reported to the central organization

no later than five calendar days after the sale of salvage, or, if the insured or

claimant is permitted to retain the vehicle, no later than five calendar days after

the date of loss payment.

(3) The central organization shall be responsible for recording any special

vehicle identification number (VIN) issued by the Commissioner of Motor Vehicles,

which data will be forwarded to the central organization pursuant to section 431(2)

of the Vehicle and Traffic Law.

(e) Verification procedures required prior to paying a total theft loss.

Notwithstanding the provisions of section 216.7(b) and (c) of this Part, an insurer shall

comply with central organization verification procedures prior to its payment of a total

theft loss, subject to the rules provided for in this section.

(1) The insurer shall defer the payment of a claim for five calendar days

following receipt of the acknowledgment from the central organization of the

insurer's total theft report. If no further communication is received from the central

organization during this five-day period indicating unresolved questionable

circumstances, the insurer shall continue with the processing of the claim in

accordance with the provisions of this Part.

(2) If the central organization verification procedure indicates insurance

coverage by more than one insurer or a previously unrecovered theft loss, the

insurers shall promptly investigate and resolve such discrepancy.

(3) If the central organization verification procedure reveals an erroneous

vehicle identification number (VIN) and the central organization is unable to clear

up such discrepancy internally, a questionnaire will be sent to the insurer by the

central organization. This questionnaire shall be returned to the central organization

within five business days of receipt by the insurer. Should central organization and

insurer efforts, after due diligence, be unsuccessful in resolving the VIN error after

a 30-day period from date of report of loss to the insurer on a vehicle that has been

inspected pursuant to Part 67 of this Title, the insurer shall proceed with the

processing of the loss in accordance with the provisions of this Part.

(4) Subject to the provisions of subdivision (h) of this section, if the central

organization certification procedure indicates that the theft loss may be fraudulent,

the insurer shall suspend processing of the loss. The central organization shall then

cooperate with any investigation.

(f) Salvage. Insurers shall, except where the insured is permitted to retain the

automobile as part of the claim settlement, take possession of the certificate of title,

properly endorsed to them, and take possession of the salvage, if any, whenever a

loss is determined by the insurer to be a total loss or a constructive total loss. Insurers,

in disposing of the salvage, shall fully comply with the requirements of section 429 of

the Vehicle and Traffic Law.

(1) An insured shall not be permitted to retain the insured vehicle if the salvage

value of the vehicle after the loss aggregates 10 percent or less of the actual cash

value of the vehicle prior to the loss, unless the insurer is satisfied that the insured

intends to retain the automobile for the insured's own use.

(2) Unless the conditions set forth in section 430.2 of the Vehicle and Traffic

Law are met, insurers shall not, directly or indirectly, transfer within or without this

State any vehicle for salvage, except to an automobile dealer, a vehicle dismantler,

or a scrap processor licensed, registered or certified in accordance with the

provisions of the Vehicle and Traffic Law, or such person meeting licensing,

registration or certification requirements of the state in which such person does

business. An insurer or its agents shall not purchase salvage vehicles or used major

component parts of motor vehicles except from a registered vehicle dismantler or

a licensed automobile dealer.

(g) Central organization recording and reporting recovery of stolen or abandoned

vehicles. The central organization shall be responsible for receiving and recording

reports received from police and other law enforcement agencies of located stolen or

abandoned vehicles pursuant to section 3412(f) of the Insurance Law. The central

organization shall promptly transmit such information to the insurer providing

automobile physical damage coverage, if any, on the located vehicle. The insurer shall

immediately notify the insured of the location where the vehicle has been stored for

safekeeping.

(h) Reporting requirement and cooperation with law enforcement agencies. (1) The

central organization and each insurer authorized to issue automobile comprehensive

insurance policies covering losses incurred to private passenger vehicles shall, upon

the request of any appropriate law enforcement agency or insurance organization

engaged in automobile loss prevention, release information in its possession resulting

from an investigation conducted by it pertaining to such comprehensive loss, including

information as such agency or organization deems related to its investigation. Should

the central organization or the insurer be of the opinion that the loss was caused by

any criminal or fraudulent act of any person or organization, or that an improper action

occurred in the disposition of an automobile subject to the provisions of this section,

the central organization or the insurer shall notify the Department of Financial

Services' Criminal Investigations Unit and any other appropriate law enforcement

agency or insurance organization engaged in automobile loss prevention of that

opinion, and shall notify the Department of Financial Services or Department of Motor

Vehicles of any improper action of their respective licensees or registrants.

(2) In the absence of fraud or bad faith, there shall be no liability on the part

of, and no cause of action of any nature shall arise against, the central organization,

or the insurer, or any person acting on their behalf:

(i) for any such information it furnished;

(ii) for its assistance in any such investigation; or

(iii) for any report or notification made pursuant to the provisions of this

section.

(3) Any information or evidence furnished pursuant to this subdivision shall be

held in confidence by the appropriate agency or insurance organization engaged in

automobile loss prevention, until such information is required to be released

pursuant to a criminal proceeding, or if such agency or organization shall be served

a summons or subpoena to testify as to any information or evidence in its

possession regarding such automobile comprehensive loss in any civil action where

an insured or other person is seeking recovery under a policy against an insurer for

such automobile comprehensive loss.

(i) Required amendatory endorsement. For all policies providing automobile

physical damage coverage issued or renewed to be effective on and after October 1,

1979, insurers shall adopt one of the following procedures:

(1) amend the policy by adding thereto the endorsement as set out in this

subdivision, which is hereby deemed approved upon filing with the Department of

Financial Services;

(2) submit for Department of Financial Services' approval the insurer's own

substantially similar endorsement; or

(3) submit for Department of Financial Services' approval the insurer's basic

policy form incorporating the substance of the endorsement set out in this

subdivision.

An insurer which adopts one of the procedures set forth in this subdivision may

subsequently submit filings under either of the other procedures.

MANDATORY PHYSICAL DAMAGE COVERAGE ENDORSEMENT (NEW

YORK)

Notwithstanding any conflicting provisions applicable to the physical damage

coverages of this policy, it is agreed that the following condition is added:

Recovery of Stolen or Abandoned Automobiles

In the event an automobile to which the physical damage coverages of this policy

apply is stolen or abandoned, the company or its authorized representative(s)

shall, when notified of the location of the automobile, have the right to take

custody of the automobile for safekeeping.

Instruction

This endorsement must be attached to, incorporated in or overprinted upon all

policies covering private passenger automobiles issued or delivered in New York.

(j) Existing policies. All policies in force on and after the effective date of this Part

providing automobile physical damage coverage shall be deemed to include the

provisions of the endorsement set forth in subdivision (i) of this section.

History

Sec. filed Dec. 5, 1974; Repealed, new filed May 12, 1982; amds. filed

Sept. 4, 1984 eff. Oct. 1, 1984; Mar. 30, 1993 eff. May 1, 1993; July 6,

2004 eff. July 28, 2004; amd. 6-1-2013; amd. 8-1-2013.

11 NYCRR 216.9 Written notice to claimants of payment of claim in third-party

settlements

(a) Upon payment of $5,000 or more in settlement of any third party liability claim,

where the claimant is a natural person, the insurer shall cause written notice to be

mailed to the claimant at the same time payment is made, by the insurer or its

representative (including the insurer's attorney), to the claimant's attorney or other

representative of the claimant by draft, check or otherwise.

(b) Nothing in subdivision (a) of this section shall create, or be construed to create, a

cause of action for any person or entity, other than the Department of Financial

Services, against the insurer or its representative based upon a failure to serve such

notice, or the defective service of such notice. Nothing in subdivision (a) of this

section shall establish, or be construed to establish, a defense for any party to any

cause of action based upon a failure by the insurer or its representative to serve

such notice, or the defective service of such notice.

History

Sec. added by renum. 216.9 to 216.10, filed Sept. 20, 1988 eff.

Oct. 5, 1988; amd. 6-1-2013; amd. 8-1-2013.

11 NYCRR 216.10 Standards for prompt, fair and equitable settlement of third-

party property damage claims arising under motor vehicle liability insurance

contracts

This section is applicable to claims arising under motor vehicle liability insurance

contracts affording coverage for claims of property damage by third parties caused by

the alleged negligence of the insured. The following provisions of this Part shall also

be applicable to these claims: sections 216.0(a), (b), (d), (e); 216.1;

216.2(preamble); 216.3; 216.4(b), (c), (d), (e); 216.5; 216.6(a), (b), (e)-(g);

216.7(a), (b)(4)-(6), (11)-(13)(c)(1), (3), (4); and 216.11.

(a) Within 15 business days of receipt of notice of claim, the insurer shall send

either written acknowledgment of the receipt of notice of claim or payment to the

claimant or the claimant's representative

(1) When notice of a claim is received from a claimant or the claimant's

representative, and the insurer is of the opinion that it is not liable for any payment,

then its sole obligation shall be to advise the claimant in writing that it is the insurer

and furnish the claimant with its policy number and deny the claim, setting forth

the reasons therefor.

(2) If the insurer is unable to verify coverage of the insured, its written

acknowledgment shall indicate such fact and request any additional information as

may be needed to ascertain the existence or absence of coverage. Upon verification

of coverage, the insurer shall provide the notification pursuant to paragraph (3) of

this subdivision.

(3)(i) In all other claims, the written acknowledgment by the insurer shall inform

the claimant that the insured has a policy which, to the extent of the insured's

negligence, provides coverage for property damage, including the loss of use of

damaged property and any other out-of-pocket expenses reasonably attributable to

the accident. The acknowledgment shall also state that in no event will the recovery

against the insurer exceed the maximum amount of the policy. The

acknowledgment shall contain an explanation of the comparative negligence rules

in New York, to the effect that, should the insurer's investigation determine that its

insured is only partially liable, coverage of the property damage, loss of use and

other expenses will only be partially reimbursed in accordance with the percentage

that the insured is found to be at fault in the accident.

(ii) Concurrent with the acknowledgment, the insurer shall send a claim form

or shall request by telephone or personal contact any pertinent additional

information necessary for the insurer to reach a final evaluation of the claim.

Within 10 business days of acknowledgment of the claim or the receipt of the

information requested when acknowledging the claim, the insurer must request

any additional information required to process the claim. If, during the

investigation, additional information will be required, the insurer must initiate a

request for such information within 10 business days after the need for the

information is established. If the insurer is advised by the claimant that the

claimant is pursuing recovery under another policy, the insurer may suspend

action on the claim.

(4)(i) Limitations for adjustment of rental vehicle claims for vehicles rented in

New York State. With respect to the rights of authorized drivers and insurers to

inspect rental vehicles, notwithstanding any other provisions of this Part, insurers

are also subject to the provisions of section 396-z(5)(c) of the General Business

Law, effective February 24, 2003, which provides as follows:

"Within seventy-two hours of return of the vehicle, the authorized driver or

his or her insurer must notify the rental vehicle company that he or she wishes

to inspect the damaged vehicle. The inspection must be completed within

seven days of the return date of the vehicle. If the authorized driver or his or

her insurer does not request this inspection within the seventy-two hour

period, the authorized driver or his or her insurer will be deemed to have

waived this right. If the rental vehicle company determines the damaged

vehicle to be a total loss and subject to salvage, such seventy-two hour period

for notification or waiver of the wish to inspect the damaged vehicle shall not

apply, and the authorized driver or his or her insurer shall have ten business

days from the authorized driver's receipt of notification from the rental vehicle

company pursuant to paragraph (a) of this subdivision (Section 396.2(5)(a))

to inspect the damaged vehicle, unless the rental vehicle company agrees to

provide access to such damaged vehicle beyond the ten business days

provided herein."

(ii) Section 396-z(5)(c) of the General Business Law further provides: "Within

the limits provided in this paragraph, the rental vehicle company shall identify

the repairer of, and provide access to, the damaged vehicle, in order to verify

the nature and extent of damages, repairs and repair costs, and/or repair

estimates."

(b) If a claimant has given notice of loss and the insurer has not received notice of

the incident from its policyholder, then, within seven business days after notice by the

claimant the insurer shall notify the policyholder that failure to give notice and to

cooperate with the insurer may result in the company disclaiming liability and the

possibility that the policyholder will be held personally liable. A form shall also be

furnished to the insured for the insured's use in detailing the incident unless the insurer

shall accept a prior telephone or personal contact which has resulted in securing the

required information.

disclaiming liability because of a breach of policy provisions by the policyholder, the

insurer shall inform the claimant in writing within five business days of such

determination.

(d) Insurers shall report to the NICB, in a manner consistent with section

216.8(d)(2) of this Part, vehicles involved in a property damage claim where the

damage to the motor vehicle is in excess of $2,500.

(e) Within 10 business days of the completion of its investigation of a property

damage claim, the insurer shall:

(1) make a written offer which is first computed in the same manner as would

be used if the claim were made under a first-party coverage by one of its insureds,

and, if applicable, modified to give effect to the comparative negligence statute of

this state, or any other state subject to policy limits. Any offer based on comparative

negligence shall contain a factual and complete explanation of the insurer's basis

for apportioning culpability. If the claim presented is greater than policy limits, then

the claimant must be so advised; or

(2) deny the claim in writing giving specific reasons therefor.

(f) If the investigation is not complete 60 calendar days subsequent to the

claimant's notice of loss, the insurer shall send a written explanation of the specific

reasons for the delay in claim settlement. An updated letter shall be sent every 60

calendar days thereafter, but the insurer must within six months of the notice of loss

advise the claimant of its decision pursuant to paragraph (e)(1) or (2) of this section.

This requirement shall cease to be applicable after a claim has been placed into

litigation or the insurer advises the claimant of its decision.

(g) In the processing of third-party property damage claims, the time limitations

of subdivisions (e) and (f) of this section shall not be applicable if there is objective

evidence available for review by Department of Financial Services examiners that

anyone involved in the accident who may assert a bodily injury liability claim against

the insured has sustained a serious injury as defined in section 5102 of the Insurance

Law. Such claim shall be settled or denied in accordance with the provisions of section

216.6 of this Part.

(h) This section shall not be applicable to subrogation claims.

History

Sec. filed Jan. 14, 1975; repealed, new filed May 12, 1982; renum. from

216.9, filed Sept. 20, 1988 eff. Oct. 5, 1988; amds. filed: Mar. 30, 1993

eff. May 1, 1993; emergency amendment filed and eff. Jan. 27, 2003,

expires April 29, 2003; permanent amendment filed April 8, 2003, eff.

April 23, 2003; amd. 6-1-2013; amd. 8-1-2013.

11 NYCRR 216.11 Examinations

To verify compliance with this Part and related statutes, Department of Financial

Services examiners will investigate the market performance of insurers. To enable

department personnel to reconstruct an insurer's activities, all insurers subject to the

provisions of this Part must maintain within each claim file all communications,

transactions, notes and work papers relating to the claim. All communications and

transactions, whether written or oral, emanating from or received by the insurer shall

be dated by the insurer. Claim files must be so maintained that all events relating to

a claim can be reconstructed by the Department of Financial Services examiners.

Insurers shall either make a notation in the file or retain a copy of all forms mailed to

claimants.

History

Sec. filed July 23, 1979; repealed, new filed May 12, 1982; renum. from

216.10, filed Sept. 20, 1988 eff. Oct. 5, 1988; amd. 6-1-2013; amd. 8-

1-2013.

11 NYCRR 216.12 Forms

The forms in this section are hereby approved for use as specified in this Part.

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

____________________,

(name of repair shop)

the repairer of your choice. Pursuant to Insurance

Regulation 64 of the New York State Department of

Financial Services, 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 that 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.

INSURER 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

FORM APD2

CERTIFICATION OF AUTOMOBILE REPAIR

(TO BE COMPLETED BY INSURER)

INSERT:

INSURED____________________

INSURER'S NAME

CLAIM #____________________

INSURER'S ADDRESS

POLICY #____________________

DATE OF

ACCIDENT____________________

DEDUCTIBLE $____________________

Section 3411(i) of the NEW YORK INSURANCE LAW (NYIL) and Article 12-A of the

Vehicle and Traffic Law (V&TL) require that the following certification be completed

and signed by both the insured and the automobile repairer. These laws also require

submission of the repair invoice (Paid Bill) by the automobile repairer or the insured

to the insurer whenever any repairs are made. The NYIL does not require an insured

to repair the automobile as a condition of payment of a loss. This form must be

completed and returned to the insurer within 45 days. A postage-paid return

envelope has been furnished for your convenience.

ANY PERSON WHO, KNOWINGLY ASSISTS, ABETS, SOLICITS OR CONSPIRES WITH

ANOTHER TO MAKE A FALSE REPORT OF THE THEFT, DESTRUCTION, DAMAGE OR

CONVERSION OF ANY MOTOR VEHICLE TO A LAW ENFORCEMENT AGENCY, THE

DEPARTMENT OF MOTOR VEHICLES OR AN INSURANCE COMPANY, COMMITS A

FRAUD ULENT INSURANCE ACT, WHICH IS A CRIME, AND SHALL ALSO BE SUBJECT

TO A CIVIL PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE VALUE OF

THE SUBJECT MOTOR VEHICLE OR STATED CLAIM FOR EACH VIOLATION.

PART I

TO BE COMPLETED BY THE INSURED:

____________________

PRINT YOUR NAME

certify, under penalties of perjury, that:

Check A or B

__________ A. I have not made any repairs to my automobile as a result of this

loss.

__________ B. I have made repairs to my automobile and I have attached a copy of

my invoice for repairs to my automobile as a result of the captioned loss.

IMPORTANT NOTICE TO INSURED

IF THIS CERTIFICATION IS NOT COMPLETED AND RETURNED, TOGETHER WITH A

COPY OF THE ITEMIZED PAID BILL, IT WILL BE ASSUMED THAT YOU DID NOT

REPAIR YOUR MOTOR VEHICLE. IF YOU HAVE A SUBSEQUENT LOSS, THE COMPANY

MUST, TO THE EXTENT RELEVANT, DEDUCT SUCH UNREPAIRED ITEMS AS PREVIOUS

DAMAGE IN SETTLING A FUTURE LOSS. IF YOU DO NOT REPAIR ALL THE DAMAGES

ALLOWED BY THE INSURER, SUCH REPAIRS NOT PERFORMED MAY REDUCE YOUR

SETTLEMENT OF ANY FUTURE LOSS. THEREFORE, IF AFTER SIGNING THIS

CERTIFICATION, YOU REPAIR ANY DAMAGE CAUSED BY THIS ACCIDENT, YOU

SHOULD NOTIFY THE COMPANY IMMEDIATELY. THE COMPANY MAY AT THAT TIME

ELECT TO INSPECT YOUR AUTOMOBILE.

____________________

DATE

____________________

SIGNATURE OF INSURED

PART II

TO BE COMPLETED BY THE AUTOMOBILE REPAIRER:

____________________

(PRINT YOUR NAME)

owner or

officer of

____________________

(PRINT NAME OF AUTO

REPAIR)

Auto Repair Shop Registration Number ____________________, located at

____________________ certify, under penalties of perjury, that I have made the

repairs

to the

automobile

owned by

____________________

(PRINT NAME OF

INSURED)

as shown on the attached itemized invoice. I further certify that:

Check A or B

__________ A. I have repaired all the items allowed by the insurer, or, if not,

__________ B. I have repaired the automobile as described on the attached

itemized invoice.

____________________

DATE

____________________

SIGNATURE OF REPAIRER (Owner or

Officer)

History

Sec. filed May 12, 1982; amd. filed Sept. 4, 1984; renum. from

216.11, filed Sept. 20, 1988 eff. Oct. 5, 1988; amds. filed: Mar.

30, 1993 eff. May 1, 1993; April 7, 1997 eff. April 23, 1997; amd.

6-1-2013; amd. 8-1-2013.