Virtual Adjustment of Vehicle Partial And Total Loss Claims (Revised)

STATE OF VERMONT DEPARTMENT OF FINANCIAL REGULATION 89 Main Street Montpelier, VT 05620-3101 For consumer assistance: [Banking] 888-568-4547 [Insurance] 800-964- 1784 [Securities] 877-550-3907 dfr.vermont.gov Insurance Bulletin #206 (revised) Virtual Adjustment of Insurance Claims February 12, 2026 On December 5, 2019, the Department of Financial Regulation issued Insurance Bulletin 206 to provide clarification of its position regarding the use of virtual adjusting in the settlement of motor vehicle partial and total loss claims. The Department’s Insurance Division is revising and updating the Bulletin to broaden its application to the settlement of all types of insurance claims due to insurers’ increased use of virtual claims adjusting and expansion of that use to other lines of insurance. Title 8 V.S.A. Section 4724(9)(D) makes it an unfair claim settlement practice for an insurer to fail to conduct "a reasonable investigation based upon all available evidence." Title 8 V.S.A. Section 4724(9)(F) 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, videos, and other virtual representations do not always reveal the true extent of the damages that have been sustained. For this reason, insurers must provide an in-person inspection of damages by a licensed adjuster within a reasonable period of time if requested by a claimant or if the use of virtual adjusting is inappropriate. The Insurance Division will not consider the use of virtual adjusting to be appropriate in any situation in which the nature of the claim indicates that there is a reasonable basis to believe the true extent of the damages cannot be properly assessed without an in-person inspection. This is of particular importance given insurers’ obligation to advise claimants of and pay for all hidden damages attributable to the loss. Insurers may not deny a claimant's request for an in-person inspection by an adjuster on the grounds that the claimant initially elected to use a virtual adjustment system. Unreasonable delays in making an adjuster available for an in-person inspection may, in certain circumstances, be considered a violation of the insurer’s obligation under Section 4724(9)(F) to effectuate prompt settlements of claims in which liability has become reasonably clear. Auto insurers are also reminded that, in adjusting total losses, costs such as vehicle reconditioning and tune-up may not be deducted from a settlement offer unless "such deductions are justified and detailed as a result of an actual inspection by [a] licensed adjuster or appraiser." See Department Regulation I-79-2 (Revised), Section 8(B)(2)(d) (emphasis added). It is the Department's position that the words Docusign Envelope ID: C80CC0FB-2E98-4AA6-9045-5D4DA16605FB DFR Insurance Bulletin #206-Rev Page 2 of 2 "actual inspection" require an in-person inspection by a Vermont licensed adjuster or appraiser rather than the use of virtual evidence such as photographs or videos. Additionally, condition deductions may only be taken when conditions exceed normal wear and tear associated with the age and mileage of the vehicle. Such conditions may include torn seats, cigarette burns, broken interior components, dented panels, or other items that are not already reflected in the value of the vehicle based on its age or the result of the loss. Condition deductions may not be taken for engine or transmission cleaning or for tires that meet inspection standards. When condition deductions are warranted, the justification for those deductions must be documented in detail on the valuation report provided to the consumer. Inquiries concerning this bulletin should be directed to the Director of Market Regulation. Kaj Samsom, Commissioner Date Docusign Envelope ID: C80CC0FB-2E98-4AA6-9045-5D4DA16605FB 2/17/2026