Unfair Claims Settlement Practices

Prompt Response to Claims

2. Failing to acknowledge communications regarding claims promptly Adjuster often responsible for promptly contacting claimant ● Direct communication can mean documented conversation in person or by phone, or letter sent by mail ● Voicemail messages and emails not considered direct communication "How soon is promptly?" ● Different states have different requirements ● In Georgia, an insurer has 15 days to respond to a claim

Proper Procedures

Failing to implement procedures for claims investigation and settlement Insurer is responsible for adopting and implementing procedures for proper investigation of claims, including: ● Prompt acknowledgement of claim ● Beginning investigation without delay ● Approving or denying claim reasonably quickly

Paying to Policy Limit

Indicating payment is final or releases insurer from claim unless: ● Policy limit has been reached ● Compromise settlement has been agreed to by first-party claimant and insurer

Unnecessary Paperwork

Insurer may not require claimant to submit both formal proof of loss form and verification before moving forward on the claim ● This would result in a duplication of information ● Insurer can gather all necessary information, including sworn statements if policy allows

Misrepresenting Policy Coverage

Insurers and adjusters must honestly disclose all pertinent policy coverages

Failing to Pay Undisputed Settlements

Insurers and their agents may not delay payments on undisputed portions of a claim ● There is no excuse for delaying or refusing payment on a valid claim ● Once an insurer receives proof of the loss, payment must be made promptly

Providing Forms in a Prompt Manner

Insurers cannot withhold forms in order to stall settlement ● Insurers must provide all necessary paperwork to claimant within 15 days of claim being filed, along with clear explanation of their use

Reasonable Investigation

Insurers must thoroughly investigate each claim ● Adjusters must consider their own investigation and statements of claimants and witnesses ● Never deny a claim without a complete investigation

Fulfilling Liability Limits

Insurers that owe claimants indemnification under multiple different coverages can't pay part of the claim and try to get the claimant to release them from further liability

Implementing Repair Standards

When an insurer owns a repair shop, they must adopt and implement standards for good workmanship

Affirm/Deny Coverage

● After receiving all information needed for investigation, insurer must make decision within reasonable amount of time ● Insurer must notify claimant if extra time is needed ● If insurer rejects claim, must provide a written statement explaining why

Explanation of Coverage

● All claims payments should be accompanied by a statement specifying which coverage was used to make payment

Consequences for Unfair Claims Settlement Practice

● Has right to charge insurer or agent if unfair practices suspected ● Must notify charged party of hearing with 15 days notice ● Can issue cease and desist if party found guilty ● Can fine up to $1,000 max. per violation (or $5,000 if party knew he was breaking the law) ● Can revoke or suspend license ● Can fine up to $10,000 for violation of cease and desist order

Explaining Claim Denial

● Insurer must provide reason for denial, based on facts of claim and insurance coverage, in writing ● If offering compromise settlement, insurer must explain how new amount was calculated

"Low-balling" Claim Estimates

● Insurers must honor contract with "utmost good faith" ● Low-balling forces policyholders to sue to recover losses, clogging legal system with unnecessary lawsuits