The Massachusetts ADALB approved Advisory Ruling 2014-01 by majority vote at a board meeting. It seeks to clarify the use video or digital imaging technology to settle claims.
The adopted ruling states: The Auto Damage Appraiser Licensing Board has passed a motion agreeing that an appraisal conducted by a licensed appraiser via review of quality video or digital images with documentation meets the requirements of 212 CMR 2.04(1)(d) “The appraiser shall personally inspect the damaged motor vehicle and shall rely primarily on that personal inspection in making that appraisal....”
“This Advisory Ruling shall be effective upon posting on the Auto Damage Appraiser Licensing Boardpublic website. Failure to comply with this ruling could result in fines and penalties as provided for by law.
The practice comes about when insurance companies allow their customers to file claims via a smart phone application. In March, for example, Esurance has announced it is offering real-time video appraisals for consumers using its mobile application.
Allstate, State Farm and MetLife, are also asking their customers to submit camera phone pictures of the damage, and they are using these photos to write their estimates. In Connecticut, Attorney John Parese, who acts as legal counsel for the Auto Body Association of Connecticut (ABAC), said he believes “the growing trend of using camera phone pictures prior to getting a repair professional involved is illegal, unethical, and most importantly, harmful to consumers.”
Because claims are being paid based on claimant-taken photos which cannot possibly depict the full extent of damages, Parese sees this practice as “a fundamental misrepresentation of policy or third-party rights and benefits... “Insurers have a legal and often fiduciary responsibility to make fair and complete payments for covered losses. This system is plainly designed to save insurers money on its own labor costs (ie. less paid appraisers) and on the amount it ultimately pays on claims (ie. calculated underpayment of claims). These savings come at the expense of consumer safety and complete reimbursement,” writes Parese.
In Massachusetts the appraisal process explicitly requires personal inspection and 212 CMR 2.04 details the procedures for conducting appraisals. In Section D, Requirement of Personal Inspection and Photographs the regulation states: “The appraiser shall personally inspect the damaged motor vehicle and shall rely primarily on that personal inspection in making the appraisal. As part of the inspection, the appraiser shall also photograph each of the damaged areas.”
This requirement is now in doubt given the ADALB ruling.
Carl Garcia, owner of Carl’s Collision Center in Fall River, MA, and a member of the ADALB, told a media source that understanding how new technologies could improve the claim process is a key driver for the new ruling. Garcia has a radio show on 1480 WSAR where he fields consumer questions on collision repair.
“Last year, attorneys at the Massachusetts Division of Insurance drafted a detailed, five-page opinion that basically said that a personal inspection was not a physical inspection so virtual technologies could be used under the existing regulation,” said Garcia. “In my view, the advisory ruling shows that we’re open to new technologies but we have to be sure they will benefit consumers and improve the claim process. This opinion moves us in the direction.”
Garcia cautioned, however, that the requirement for documentation of how video or images were used to create the appraisal is an important part of the ruling. “Quality video and images along with documentation is important. The capabilities of smart phone can vary impacting the photos they take,” said Garcia. “Anyone using the technology should thoroughly document how any technology was used and how it supports the appraisal.”