Rhode Island state Sen. Maryellen Goodwin (D-1) recently introduced R.I. Senate Bill 465 regarding insurance unfair claims practices. The bill amends current Rhode Island law identifying as an unfair claims practice a motor vehicle’s designation as a total loss when the cost to rebuild or reconstruct the vehicle to its pre-accident condition is less than 75 percent of fair market value.
Under the bill, any of the following acts by an insurer constitutes an unfair claims practice:
• Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than 75 percent of the “fair market value” of the motor vehicle immediately preceding the time it was damaged.
(i) For the purposes of this subdivision, “fair market value” means the retail value of a motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values commonly used by the automotive industry to establish values of motor vehicles.
(ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the total cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than 75 percent of the fair market value of the motor vehicle immediately preceding the time it was damaged.
(iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle a total loss at the vehicle owner’s request and with the vehicle owner’s express written authorization, if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than 75 percent of the “fair market value” of the motor vehicle immediately preceding the time it was damaged.
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