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Vt. Insurance Division: In-person auto inspection necessary if requested

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The Vermont Division of Insurance on Wednesday warned insurers that they must promptly inspect a vehicle in person if requested by a claimant.

Bulletin No. 206 signed by Department of Financial Regulation Commissioner Michael Pieciak also holds that insurers can’t deduct certain costs from a total loss at all without an in-person inspection of the vehicle.

Vermont Regulation 1-1979-2 Section 8 states “Such costs as, but not limited to, reconditioning and tune up shall not be deducted by insurer, unless such deductions are justified and detailed as a result of actual inspection by licensed adjuster or appraiser.”

Pieciak wrote in the document dated Wednesday his agency defined “actual inspection” as an actual human being next to the actual car.

“It is the Department’s position that the words ‘actual inspection’ require an in-person inspection by an adjuster or appraiser rather than the use of virtual evidence such as photographs or videos,” Pieciak wrote in the bulletin.

The document also casts doubt into the value of photo estimating for repairable claims.

Section 4724(9)(D) of Title 8 V.S.A. makes it an unfair claim settlement practice for an insurer to fail to conduct ‘a reasonable investigation based upon all available evidence,'” Pieciak wrote. “Section 4724(9)(F) of Title 8 requires insurers to make ‘prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.’  While virtual claims adjustment systems may, in some situations, help settle claims more quickly and reduce costs for the insurer, there is compelling evidence that photographs and videos do not always reveal the true extent of the damage a vehicle has sustained.” (Emphasis added.)

Pieciak stated that an increase in photo or video estimating by Vermont insurers has been accompanied by “a rise in consumer complaints alleging that the virtual adjustment process has unreasonably delayed the settlement of vehicle damage claims or resulted in inadequate settlement offers.”

If an insurer frequently takes too long to complete an in-person inspection, it could be construed an unfair claim settlement practice under V.S.A. 4724, according to Pieciak.

“Unreasonable delays in making an adjuster available for an in-person inspection may, in appropriate circumstances, be considered a violation of Section 4724(9)(F)’s obligation to effectuate prompt settlements of claims in which liability has become reasonably clear,” he wrote.

The bulletin shows the value in consumers and potentially body shops making complaints to state insurance agencies. Pieciak cites an increase in complaints in his opening paragraph. (He also mentions “compelling evidence” that photo and video estimating misses damage, though it’s not clear if the agency received that evidence in the course of a complaint or through some other channel.)

It’s also interesting to note the insurer photo estimating behavior criticized here is fairly similar to that described by a state insurance regulator on the other side of the country.

The state of Oregon is considering a bulletin outlining unacceptable photo estimating-related behavior; public comment closed Nov. 15. A draft put forth Oct. 21 reports:

However, the Oregon Division of Financial Regulation (DFR) has received numerous complaints from consumers about potential unfair claim settlement practices in connection with the use of virtual claim adjusting systems by auto insurers.

Consumers have reported that some insurers are providing misleading information and limiting the availability of in-person adjusters. Some insurers have stated that claim payments would be substantially delayed unless a virtual claim adjustment system is used. In some instances, once an individual initiates a claim via a virtual claim adjustment system, insurers have refused a subsequent request for an in-person adjuster.

Consumers have reported that some insurers are failing to conduct reasonable investigations when a loss occurs and are systematically making initial claim settlement offers that are significantly lower than the actual cost of repair. In some instances, insurers are failing to adequately respond when the consumer presents evidence that the initial offer was inadequate or refusing to send a human adjuster in a timely manner when an in person investigation is needed.

Insurance laws and regulations tend to show similarities, and Oregon Revised Statutes details mentioned in the Oregon DFR draft do seem to echo Vermont laws.

So it’ll be interesting to see if still other state regulators encounter reports of the behavior alleged in Oregon and/or Vermont and wind up taking similar action in response.

More information:

Vermont Insurance Bulletin No. 206: “Virtual Adjustment of Vehicle Partial And Total Loss Claims”

Vermont Department of Financial Regulation, Dec. 4, 2019


Oregon Department of Consumer and Business Services/Oregon Division of Financial Regulation, Oct. 21, 2019


The Vermont flag flies outside of the Statehouse. (kickstand/iStock)

Department of Financial Regulation Commissioner Michael Pieciak. (Provided by Vermont DFR)

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