Insurance Claim Law and Unfair Claims Practices
Post Insurance Claim Law and Unfair Claims Practices Question (below)
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If you know some insurance claim law that is in your favor on a particular issue, you can use that in your letters to the insurer to argue your position. Since adjusters are supposed to know the unfair claims practices regulations, they and their supervisors are competent to argue unfair practices issues. If you start pointing out insurance claims law other than unfair claims practices regulations, don’t be surprised if the insurer refers your claim to their attorney to consider and often resist your arguments.
If you have a real sticky problem with a particular issue that involves many thousands of dollars, it is my advice to hire an attorney, preferably in the fire insurance litigation field, to research the issue for an hour and give you his opinion of whether there is law to support your side of the issue.
Below is a list of unfair claim practices enacted by the US Congress in 1945 (Public Law 15, Seventy-ninth Congress) and is required to be included in all states insurance regulatory laws (the section numbers below are as they appear in the California insurance code and may be different from state to state). In some states, such as California, the law provides that just one unfair act, against just one policy holder, is enough to incur punishment of the insurer. However, in reality, insurers are rarely punished unless an unfair practice is repeated many times.
(h) Knowingly committing or performing with such frequency as to
indicate a general business practice any of the following unfair
claims settlement practices:
(1) Misrepresenting to claimants pertinent facts or insurance
policy provisions relating to any coverages at issue.
(2) Failing to acknowledge and act reasonably promptly upon
communications with respect to claims arising under insurance
(3) Failing to adopt and implement reasonable standards for the
prompt investigation and processing of claims arising under insurance
(4) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss requirements have been completed
and submitted by the insured.
(5) Not attempting in good faith to effectuate prompt, fair, and
equitable settlements of claims in which liability has become
(6) Compelling insureds to institute litigation to recover amounts
due under an insurance policy by offering substantially less than
the amounts ultimately recovered in actions brought by the insureds,
when the insureds have made claims for amounts reasonably similar to
the amounts ultimately recovered.
(7) Attempting to settle a claim by an insured for less than the
amount to which a reasonable person would have believed he or she was
entitled by reference to written or printed advertising material
accompanying or made part of an application.
(8) Attempting to settle claims on the basis of an application
which was altered without notice to, or knowledge or consent of, the
insured, his or her representative, agent, or broker.
(9) Failing, after payment of a claim, to inform insureds or
beneficiaries, upon request by them, of the coverage under which
payment has been made.
(10) Making known to insureds or claimants a practice of the
insurer of appealing from arbitration awards in favor of insureds or
claimants for the purpose of compelling them to accept settlements or
compromises less than the amount awarded in arbitration.
(11) Delaying the investigation or payment of claims by requiring
an insured, claimant, or the physician of either, to submit a
preliminary claim report, and then requiring the subsequent
submission of formal proof of loss forms, both of which submissions
contain substantially the same information.
(12) Failing to settle claims promptly, where liability has become
apparent, under one portion of the insurance policy coverage in
order to influence settlements under other portions of the insurance
(13) Failing to provide promptly a reasonable explanation of the
basis relied on in the insurance policy, in relation to the facts or
applicable law, for the denial of a claim or for the offer of a
(14) Directly advising a claimant not to obtain the services of an
(15) Misleading a claimant as to the applicable statute of
(16) Delaying the payment or provision of hospital, medical, or
surgical benefits for services provided with respect to acquired
immune deficiency syndrome or AIDS-related complex for more than 60
days after the insurer has received a claim for those benefits, where
the delay in claim payment is for the purpose of investigating
whether the condition preexisted the coverage. However, this 60-day
period shall not include any time during which the insurer is
awaiting a response for relevant medical information from a health
care provider .