Unfair Claims Practices
Insurers refused to pay thousands of claims following Hurricanes Rita and Katrina. This was a clear example of Unfair Claims Practices. Unfair Claims Practices are not limited to hurricane losses. Insurance companies denial and delay claims quite often.
What should you do if your insurance company is slow to settle your claim? What can you do to tell the difference between poor customer service and illegal behavior?
How can you tell if your insurance company has been treating you fairly after you file an insurance claim?
Unfair Claims Practices regulations are in place in every state to protect claimants and policyholders from being abused during the claims process.
The primary responsibility of a state regulator is to protect the interests and protections of consumers. To find out more about the regulations in your state, check with the Department of Insurance.
Let me show you some examples:
* The attempt to settle a claim that was based on an application that the company modified without the permission or knowledge of the insured. This is most commonly seen when an insurance company changes a date on an application. It could also be any information that is missing from the application.
* Failure to act quickly after receiving information regarding an insurance claim. Most states require a response within 15 days. You might need to wait several weeks for your adjuster to contact you after a hurricane like Katrina. This could be considered an Unfair Claims Practice.
* Requiring unnecessary documents or reports that contain the same information to delay a claim investigation. A major insurance company sent a claim to their Special Investigations Unit. They then took recorded statements from the insureds…and asked them to submit to an Examination under Oath. I believe that this was Unfair Claims Practice.
Failure to pay a claim promptly, fairly, and equitably if applicable. Unprofessional insurance companies may try to silence you by telling that they are still investigating your case.
* Failure to settle claims promptly where liability is reasonably clear under a portion of your policy to influence settlements for any other portion of the insurance policy coverage. Your auto insurer cannot refuse to pay your bills under your medical coverage so you can settle your uninsured motorist case.
* Failure to provide a clear explanation of the policy or law in order to deny a claim or offer a compromise settlement. You should include the policy language that applies if you receive a denial letter regarding your claim. Unfair Claim Practice could lead to no quote.
* Persuading insureds to not invoke or use arbitration. An insurance company cannot appeal almost all arbitration awards in favor policyholders to force settlement of claims.
* Falsely stating important facts or ignoring insurance policy provisions. Sometimes insurance companies deny claims because they misunderstand the policy. It’s then up to you for them to change their mind.
* Refusing an insurance company to inform the insured about a loss within a reasonable amount of time after receiving a complete proof of loss statement. Most policies require that the insurance company accept or deny proof of loss within 30 calendar days. It’s in the policy, so make sure you read it.
* Denying claims without conducting a reasonable loss investigation. Problem is with the definition of “reasonable”. Insurers sometimes settle claims using “lowball settlement offers” to avoid much investigation.
* To encourage insureds to sue, offer very low settlements. This would make it difficult for claim settlements to be completed on time, sometimes for many years. Only the insurance company and the attorneys will benefit from this delay.
* Settlement of claims for amounts less than a reasonable person would expect. Insurance companies often make low-ball offers for settlements to both their policyholders and third-party claimants. Insurers will always pay the lowest amount to settle a claim or policyholder. This is one way to maximize profit.
Talk to your supervisor if you believe that an adjuster or examiner at your insurance company has committed Unfair Claims Practices. If the situation does not improve or resolve completely, you can file a complaint to your state’s insurance department.
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