A more practical Vermont Insurance Claims guide: supplement submission order, the process pressure that hides behind the rule, and clearer timing

Vermont's insurance regulatory framework is administered by the Department of Financial Regulation (DFR; 89 Main Street, Montpelier, VT 05620-3101), which oversees all forms of insurance transacted in the state under Title 8 of Vermont Statutes. Vermont is notable in the insurance world for hosting a robust captive insurance industry — more than 600 captive insurance companies are domiciled in Vermont, making it the largest captive domicile in the United States and one of the largest in the world — and for its Green Mountain Care Board (GMCB; 89 Main Street, Suite 300, Montpelier, VT 05602), a unique regulatory body with authority to set annual hospital budgets, approve insurance rate filings for commercial health plans, and govern the all-payer claims database. No other state has a regulatory structure that gives a single board the authority to approve both hospital operating budgets and health insurance premium rates; the GMCB's oversight has made Vermont health insurance rate increases among the most transparent and publicly contested in the country.

Vermont is a traditional fault-based auto insurance state — not a no-fault jurisdiction — meaning that an injured driver must prove the other party's negligence to recover damages from the at-fault driver's liability insurer. Vermont's minimum auto liability requirements under 23 V.S.A. sec. 800 are $25,000 per person and $50,000 per occurrence for bodily injury, and $10,000 for property damage (25/50/10). Uninsured and underinsured motorist coverage is required to be offered to all Vermont auto policyholders under 23 V.S.A. sec. 941, with limits that must at least equal the policy's bodily injury liability limits unless the insured affirmatively rejects coverage in writing. Vermont's comparative fault rule under 12 V.S.A. sec. 1036 applies to auto claims — a claimant whose fault does not exceed 50% can still recover, but recovery is reduced proportionally to the claimant's percentage of fault. Vermont does not require personal injury protection (PIP) coverage; medical payments coverage is separately available as an option.

Tropical Storm Irene, which struck Vermont on August 28-29, 2011, remains the defining insurance event in Vermont's recent history. The storm deposited up to 10 inches of rain across central and southern Vermont, devastating the Winooski, White, Mad, Ottauquechee, Williams, and Black River valleys; the town of Waterbury flooded to a depth that inundated the state office complex (National Life Drive, Waterbury, VT 05671); the village of Moretown was nearly completely destroyed; and Route 4 through the Ottauquechee Valley was obliterated. Total damage exceeded one billion dollars. A significant portion of the residential and commercial property damage was uninsured or underinsured because standard homeowners and commercial property policies exclude flood damage; Vermont's participation in the National Flood Insurance Program (NFIP), administered by FEMA, was limited relative to the actual flood exposure. Post-Irene, Vermont DFR and the Vermont Emergency Management Agency (VEMA; 45 Wayside Drive, Williston, VT 05495) conducted extensive outreach encouraging flood insurance take-up in Vermont's river valleys. Properties in FEMA Special Flood Hazard Areas (SFHAs) along the Connecticut, Lamoille, Winooski, and other rivers now face mandatory flood insurance purchase requirements if federally backed mortgages are involved.

Vermont's workers' compensation system under 21 V.S.A. sec. 601 et seq. is mandatory for all Vermont employers with one or more employees, operates in a competitive private insurance market (unlike North Dakota's exclusive state fund), and is administered by the Vermont Department of Labor (5 Green Mountain Drive, Montpelier, VT 05601). Vermont workers' compensation covers medical treatment, temporary total disability at 66.67% of average weekly wages (subject to the state maximum weekly benefit), permanent partial and total disability, and vocational rehabilitation. Vermont's WC system is notable for its agricultural employer provisions: under 21 V.S.A. sec. 601(14), agricultural workers in Vermont ARE covered by workers' compensation if the employer has five or more agricultural employees for more than twelve weeks in the year, or employs ten or more agricultural workers at any time — a threshold that covers many Vermont dairy operations. Undocumented workers who are injured on Vermont farms are entitled to workers' compensation benefits regardless of their immigration status; immigration status is explicitly irrelevant to WC eligibility under Vermont law.

Vermont's homeowner's insurance market is significantly affected by the state's aging housing stock. Vermont has some of the oldest housing in the United States — many homes date to the late 19th and early 20th centuries — and carry known risks of lead paint (pre-1978 construction common), asbestos insulation, knob-and-tube electrical wiring, and oil storage tanks (both above-ground and underground). Insurers routinely exclude or limit coverage for these known hazards, and Vermont homeowners with oil-fired heating systems face potential liability for petroleum contamination of soil or groundwater if underground tanks fail, a risk that is addressed by the Vermont Petroleum Cleanup Fund (29 V.S.A. sec. 1 et seq.) but that may not be covered under standard homeowner policies. Vermont's ski area properties in Stowe, Killington, and Sugarbush present unique insurance challenges including higher-than-average replacement values, avalanche and mud slide exclusions in mountain property policies, and rental income disruption coverage for properties that supplement their owners' income through ski-season rentals.

Vermont's property and casualty insurance claims must be handled in compliance with Vermont's unfair claims settlement practices provisions under 8 V.S.A. sec. 4724, which prohibit unfair claim settlement practices including misrepresentation of policy terms, failure to acknowledge coverage within a reasonable time, failure to conduct a timely investigation, and failure to pay valid claims promptly. Vermont courts have recognized bad faith insurance claims under Vermont's Consumer Protection Act (9 V.S.A. sec. 2451 et seq.); a Vermont insurer that wrongfully denies coverage or unreasonably delays payment may face consumer protection claims with attorney's fees and double or triple damages. Vermont's insurance complaints are handled by DFR's Consumer Services Division; policyholders who believe their insurer has violated Vermont's claims handling standards can file complaints at DFR. Vermont's Green Mountain Care Board additionally provides a separate complaint and grievance mechanism for health insurance disputes distinct from DFR's general insurance complaint process.