While it would be impossible to detail
each state’s requirements regarding unfair
claims handling and settlement practices
in a succinct manner, here is a collection
of several “do’s” and “don’ts” to keep in
mind when handling and settling property and casualty insurance claims.
1) Disclose all pertinent benefits, cov-
erages and other provisions of the in-
surance contract under which claim is
In general, this requirement extends
only to first-party insureds. However,
this disclosure requirement leaves several questions including: who determines
what is “pertinent” and what needs to be
done when there are multiple policies under which a claim may be presented?
2) Timely respond to all communica-
Generally, each jurisdiction estab-lishes requirements for an insurer’s first
action on a claim, often triggered by the
initial receipt of a claim. While there is
no uniform time limit for acknowledging a claim throughout all of the states,
it is generally a short period of time. The
time frames required under different
states’ laws include, but are not limited
to: “within 10 working days after receipt
of a claim,” “within 20 working days after receipt of a claim,” “with reasonable
promptness,” or “promptly.” Nevertheless, many states require responses or
acknowledgement of any pertinent communication from an insured or claimant
under the prescribed time frames.
Additionally, many states specifically
require prompt investigation of a claim,
frequent notification of continued investigation concerning a claim, and time-frames for making payment pursuant to
any settlement or claim approval. Thus, it
is always important to act or communicate without delay.
3) Provide reasonable explanation from
the language in the insurance policy of
the basis for the denial of a claim, or for
an offer in a compromise settlement.
When denying a claim it is important
to advise the insured or claimant of the
specific policy provisions affecting this
decision. The same is true for a settlement
offer. In essence, the states are seeking to
protect the insured or claimant and fully
inform them of the insurer’s position to
allow them to determine whether they
need to take any additional action.
1) Deny a claim based on failure of the
claimant to make the vehicle or proper-
ty available for inspection unless there
is documentation of a breach of the
policy provisions in the claim file.
Again, to avoid violations of many of the
specific unfair claim practices, it is important to document the file, including any
and all communication with the insureds
or claimants, any refusal on their part to
comply with policy provisions or requests,
and any investigatory actions taken.
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