Oregon Uninsured Motorist Coverage and Auto Claim Laws

Oregon requires uninsured and underinsured motorist coverage on every auto liability policy, and it does not let a buyer drop that coverage altogether. This chapter covers that requirement, along with Oregon’s rules on aftermarket crash parts, the use of credit history, and total loss settlements.

Uninsured and underinsured motorist coverage (ORS 742.500 to 742.510)

Every motor vehicle liability policy that covers bodily injury liability, issued for delivery in Oregon or covering a vehicle principally used or garaged in Oregon, must include uninsured motorist (UM) coverage (ORS 742.502). Oregon’s UM coverage must include underinsured motorist (UIM) coverage, so the two always come together.

• UM pays what the insured is legally entitled to recover as damages for bodily injury or death caused by an accident with an uninsured vehicle
• UIM pays when the at-fault driver has liability insurance, but less than the insured’s damages. It pays the part of the damages the at-fault driver’s insurance does not, up to the insured’s own UM limits

Definitions

The required terms of the coverage are set out in ORS 742.504:

• Insured means the named insured and, while they live in the same household, the named insured’s spouse and relatives of either of them (unless the spouse or relative owns a vehicle not described in the policy). It also includes a child in the household being reared as the insured’s own, and any other person occupying an insured vehicle with the named insured’s permission
• Uninsured vehicle includes a vehicle with no collectible bodily injury liability insurance of at least the Oregon minimum limits, a vehicle whose liability insurer denies coverage or becomes insolvent, a hit-and-run or phantom vehicle, and a stolen vehicle: an insured vehicle that injures the insured while driven, without the insured’s consent, by someone who has no liability insurance (the accident must be reported to police within 72 hours, and the insured must cooperate in prosecuting the theft)
• A hit-and-run vehicle causes injury through physical contact, and the identity of either its operator or its owner cannot be determined
• A phantom vehicle causes the accident without any physical contact, and the identity of either its operator or its owner cannot be determined. The facts must be corroborated by evidence other than the testimony of the insured or anyone else with a UM claim from the accident

For both hit-and-run and phantom vehicle claims, the accident must be reported to a police, peace or judicial officer, or to the Department of Transportation, within 72 hours. The insured must also file a sworn statement with the insurer within 30 days after that. For a hit-and-run claim, the insured must also make the vehicle they were occupying available for the insurer to inspect, if the insurer asks.

If the insured and the insurer disagree about whether the insured is entitled to recover, or how much, the question may be decided by arbitration if both agree to it at the time of the dispute, and the insured’s cost of the arbitration may not exceed $100 (ORS 742.504(10)). Unless they agree otherwise, the panel has three arbitrators: one chosen by each side, and a third chosen by those two (ORS 742.505).

Bodily injury

Oregon’s UM and UIM coverage protects against bodily injury, which means bodily injury, sickness or disease, including death resulting from it. UM limits must be at least the minimum bodily injury limits of the financial responsibility law, $25,000 per person and $50,000 per accident.

Uninsured motorist property damage (ORS 742.508, 742.510)

Damage to the insured’s own car is handled separately. Every insurer that writes private passenger auto policies in Oregon must have available for sale coverage for property damage to the insured’s vehicle caused by an uninsured vehicle, of at least the $20,000 property damage minimum (ORS 742.510). Unlike bodily injury UM, it is offered rather than required. It does not cover the first $300 of damage caused by a hit-and-run or phantom vehicle, or the first $200 in other cases, and it does not pay for loss of use of the vehicle.

UM and UIM rejection

Here Oregon departs from the “opt out” approach you may see in other states. An Oregon buyer cannot reject UM and UIM coverage. What the named insured can do is choose lower limits (ORS 742.502(2)):

• By default, UM limits must equal the policy’s bodily injury liability limits
• The named insured may elect lower UM limits, but only in writing, and never below the financial responsibility minimums of $25,000 per person and $50,000 per accident
• The named insured must sign a statement electing the lower limits within 60 days after making the election. The statement acknowledges that UM coverage equal to the liability limits was offered. It also includes a brief summary of what UM and UIM coverage provide, and the price of each option
• The statement stays in force until the named insured rescinds it in writing, or until the bodily injury liability limits change. A new statement is not needed just because vehicles are added or removed, or the policy is renewed, by the same insurer or group, unless the liability limits change

Sidenote

Know this...

A question that asks how an Oregon applicant “rejects” uninsured motorist coverage has no Oregon answer. The applicant may reduce UM/UIM limits in writing, down to 25/50, but every Oregon auto liability policy carries UM and UIM coverage.

Aftermarket Crash Parts Act (ORS 746.287, 746.289, 746.292)

An aftermarket crash part is a replacement part, sheet metal or plastic, that forms the visible exterior of the vehicle (including inner and outer panels), is usually repaired or replaced after a collision, and is not supplied by the original equipment manufacturer (OEM).

• Insurers: without the vehicle owner’s consent, an insurer may not require a body and frame repair shop to supply or install an aftermarket crash part unless the part has been certified by an independent test facility to be at least equivalent to the part it replaces (ORS 746.287). “At least equivalent” means the same kind of part, of at least the same quality in fit, finish, function and corrosion resistance.
• Warranty: an insurer whose auto policy covers repair of the vehicle must make available to its insured, on request, a warranty for crash parts not made by the original equipment manufacturer (ORS 746.289).
• Repair shops (ORS 746.292):
  • All work goes on an invoice that says whether any used parts were supplied, with a copy to the customer
  • On request, the shop gives a written estimate before starting work, and may not charge more than the estimate without the customer’s consent
  • OEM crash parts come with a warranty that they meet or exceed the original standards
  • If non-OEM crash parts will be used, the estimate must carry a prescribed notice. The notice says the estimate is based on a part not made by the original manufacturer, that using it may invalidate any remaining manufacturer’s warranty on that part, and that a copy of the non-OEM part’s warranty will be provided for comparison
  • A shop may not install used parts when new parts were to be installed, install uncertified aftermarket parts without the owner’s consent, charge for repairs not performed, or refuse the insurer reasonable access to inspect the vehicle

The claim settlement rules add that an estimate must identify each non-OEM crash part in a clearly understandable way, with a copy to the claimant. An insurer may not require the claimant to use a particular repair shop (OAR 836-080-0240; ORS 746.280).

Credit History (ORS 746.661, 746.663)

Oregon limits how an insurer may use a consumer’s credit history or insurance score in personal insurance, such as private passenger auto and homeowners coverage (ORS 746.661, 746.663).

An insurer may not:

• Cancel or nonrenew a personal insurance policy based in whole or in part on credit history or an insurance score, however long the policy has been in effect (ORS 746.663). ORS 746.661 states the same bar for a policy in effect more than 60 days; the first 60 days are not an exception
• Decline coverage on credit history alone. Credit may be used to decline coverage at initial underwriting only in combination with other substantive underwriting factors
• Rerate an existing policy based on credit when the customer’s marital status changes because of death or divorce

In declining coverage, calculating an insurance score or setting rates, an insurer may not use:

• The absence of a credit history, or the inability to determine one, unless it follows one of the approaches the statute allows (such as treating the consumer as having neutral credit)
• Credit inquiries the consumer did not initiate, or the consumer’s own requests for their credit information
• Inquiries relating to insurance coverage
• Multiple home-mortgage or auto-lending inquiries made within 30 days of one another, unless only one is counted
• The consumer’s total available line of credit (though it may consider outstanding debt in relation to that line)

Rerating on request. If an insurer uses credit at any time in rating a personal policy, the consumer may ask, once a year per insurer per policy line, to be rerated as if applying new. The insurer must rerate within 30 days, may not use the rerating to raise the premium, and must lower premiums if the consumer qualifies for a better rating category. If a disputed credit history led to a higher premium or a less favorable placement, and the consumer resolves the dispute under the federal Fair Credit Reporting Act and tells the insurer in writing, the insurer must rerate back to the start of the current policy term. Apart from these cases, an insurer may rerate a policy at renewal only on rating factors other than credit history or insurance score.

Total Loss (ORS 742.554, 801.527, 819.014; OAR 836-080-0240)

When a vehicle is “totaled” (ORS 801.527). A totaled vehicle is one that an insurer obligated to cover the loss declares a total loss, or takes possession of or title to. The definition also covers two uninsured cases: a stolen vehicle not recovered within 30 days, and a vehicle whose estimated repair cost is at least 80 percent of its pre-damage retail market value.

Disclosures to the owner (ORS 742.554). When an insurer declares a vehicle a total loss and offers a cash settlement to the insured or a third-party owner, it must provide:

• Any valuation or appraisal reports it relied on to determine value
• A written statement, in a form the Director provides, explaining total loss, vehicle valuation and the insurer’s duties, and how to contact the Division of Financial Regulation

The title (ORS 819.014). An insurer that declares a vehicle totaled must either obtain the certificate of title from the owner as a condition of settlement and surrender it to the Department of Transportation within 30 days of receiving it, or, if it cannot get the certificate, notify the department within 30 days that the vehicle is totaled and tell the owner to surrender the title and to tell any later buyer. Failing to do so is a violation of the Insurance Code.

Settling the claim (OAR 836-080-0240). When a collision or comprehensive total loss is settled on the basis of actual cash value or replacement, the insurer may:

• Offer a replacement vehicle at least comparable to the insured vehicle: same make, same or newer year, similar body style, options and mileage, in as good or better condition, and available for inspection within a reasonable distance of the insured’s home. The insurer pays the taxes, license fees and transfer fees; the insured pays only the deductible
• Make a cash settlement, less any deductible, that includes the applicable taxes, license fees and transfer fees for a comparable vehicle. The insurer gives the insured copies of the information it used to reach the figure. It may base the value on a qualifying computerized valuation database, on the actual cost of a comparable vehicle it identifies, or on a documented alternative with itemized deductions

Further protections:

• If the insurer and the owner cannot agree on the value, the insurer must pay the amount that is not in dispute. It need not pay until the owner agrees to transfer ownership and lets the insurer move the vehicle to a disclosed location, where it stays available for inspection for at least 14 days
• If the insured tells the insurer within 35 days of receiving the claim payment that a comparable vehicle cannot be bought for that amount, the insurer must reopen the claim. It may then find a comparable vehicle at that price, pay the difference for one the insured found or buy that vehicle for the insured, offer a replacement, or settle through the policy’s appraisal process, paying the insured’s reasonable appraisal costs. It need not reopen if, at settlement, it told the insured in writing where a specific comparable vehicle could have been bought for that amount, identifying the vehicle by its vehicle identification number or another specific identifier. The right to have the claim reopened belongs to the insured on its own, first party claim
• On request, the insurer includes the insured’s deductible in its subrogation demand and shares any recovery at least proportionately
• Any reduction for betterment or depreciation must be itemized, documented in the claim file, and appropriate in amount

Sidenote

Know this...

A totaled vehicle’s cash settlement in Oregon includes the taxes, license and transfer fees needed to buy a comparable vehicle, less the deductible and any other deductions the rule allows, which must be itemized and documented. A settlement that pays the bare market value of the car leaves out part of what the rule requires.

Lesson summary

• UM coverage is mandatory and includes UIM. UM limits equal the bodily injury limits unless the named insured elects lower limits in writing, never below 25/50. Oregon has no outright rejection (ORS 742.502).
• Hit-and-run and phantom vehicle claims require a report to police or the Department of Transportation within 72 hours and a sworn statement to the insurer within 30 days.
• An insurer may not require an uncertified aftermarket crash part without the owner’s consent, and must offer a non-OEM crash part warranty on request (ORS 746.287, 746.289).
• Credit history may not be used to cancel or nonrenew personal insurance at any point in the policy’s life, or to decline coverage by itself (ORS 746.661, 746.663).
• A total loss settlement comes with the insurer’s valuation reports and a Director-approved written statement (ORS 742.554). A cash settlement includes taxes and fees, and the insurer must reopen the claim if the insured notifies it, within 35 days of receiving the payment, that a comparable car cannot be bought for that amount (OAR 836-080-0240).