3 - 7 Unfair Claim Settlement Practices by Insurers

11. Failing to affirm or deny coverage of a claim within a reasonable time

- After receiving all the information necessary for an investigation, including proof of loss forms, the insurer must make a decision within a reasonable amount of time

8. Attempting to settle claims for less than what a reasonable person would expect based on advertisements made in applications

- An insurer is obligated to honor the terms of any written or printed advertising material that is accompanied the policyholder's application

7. Trying to settle a claim using an application that was altered without insured's knowledge or consent

- An insurer may not attempt to settle claims on the basis of an application that was altered without the insured's knowledge or consent - This includes binders or any other document that would change the insured's coverage in anyway

12. Refusing payment at insured's request

- An insurer must investigate the insured's liability based on all the information available - It may not refuse to pay a claimant based on the insured's request to do so.

13. Failure to Maintain Complaint Records

- An insurer must maintain complete records of all complaints it has received. The records should include the details of each complaint, how long it took to process, and whether it was deemed valid or not - The insurer must also file this information with the insurance department every year

1. Misrepresentation

- An insurer or adjuster may not misrepresent facts or policy provisions in order to reduce the dollar amount of a claim settlement

4. Failure to make prompt, fair, and equitable settlements for claims in which liability has become reasonably clear

- If a claim is legitimate, the settlement amount has become clear, and the claimant has provided proof of the loss, the insurer must pay that settlement promptly

9. Delaying the settlement process by demanding both a preliminary claim report and formal proof of loss forms

- If an insurer requires an insured, a claimant, or the physician of either to submit a preliminary claim report, the insurer may not delay the settlement process by also demanding formal proof of loss forms - These forms contain substantially the same information, so requiring both before proceeding is simply a way of putting off settlement.

14. Knowingly Underestimating the Value of a Claim

- Insurers and their adjusters must remember it is their duty to deal fairly and in good faith with claimants - They should never knowingly underestimate a claim or offer lower than what the claimant is fairly owed

3. Failure to Implement standards for prompt claims investigation

- Insurers must implement and enforce standards to make sure all claims get investigated promptly

5. Compelling insureds into litigation

- The insurer must not offer a policyholder substantially less than the proper amount of damages in order to force them to take the case to court to recover damages -Not only is this type of behavior unfair, it also clogs the legal system with unnecessary lawsuits to simply because the insurer is not willing to indemnify policyholders according to contract

6. Attempting to compel a claimant to accept a settlement that is less than the amount awarded in arbitration, by telling him that the insurer has a policy of appealing arbitration awards

- The insurer must not try to compel the insured to settle for less than the amount awarded him at the arbitration by threatening to appeal the arbitration awarded

10. Making claims payments without explaining the coverage providing for them

- When paying a claim, the insurer should include a statement that explains the amounts provided by each coverage so the policyholder understands clearly what is being covered under which provision of the policy

Unfair Claim Settlement Practices

1. Misrepresentation 2. Failure to acknowledge claims promptly 3. Failure to Implement standards for prompt claims investigation 4. Failure to make prompt, fair, and equitable settlements for claims in which liability has become reasonably clear 5. Compelling insureds into litigation 6. Attempting to compel a claimant to accept a settlement that is less than the amount awarded in arbitration, by telling him that the insurer has a policy of appealing arbitration awards 7. Trying to settle a claim using an application that was altered without insured's knowledge or consent 8. Attempting to settle claims for less than what a reasonable person would expect based on advertisements made in applications 9. Delaying the settlement process by demanding both a preliminary claim report and formal proof of loss forms 10. Making claims payments without explaining the coverage providing for them 11. Failing to affirm or deny coverage of a claim within a reasonable time 12. Refusing payment at insured's request 13. Failure to maintain compliant records 14. Knowingly underestimating the value of a claim

2. Failure to acknowledge claims promptly

_ Insurers must acknowledge insurance claims and respond to any claim submitted to them within a reasonable time frame