| Unfair Claims Practices | | | | insurance policy coverage. For example, your auto |
| Insurance companies refused to settle thousands of | | | | insurer can't refuse to pay your bills under the |
| claims after Hurricanes Katrina and Rita and showed | | | | medical coverage in your policy so you'll settle your |
| America just what Unfair Claims Practices can look | | | | uninsured motorist claim. |
| like. But Unfair Claims Practices happen in more than | | | | * Failing to promptly and clearly explain the policy or |
| just hurricanes losses. Insurance companies deny and | | | | the law for either denying a claim or offering a |
| delay claims on a very regular basis. | | | | compromise settlement. If you get a denial letter for |
| What do you do when your insurance company | | | | your claim, the letter should quote the policy language |
| drags its feet and will not settle your claim? How do | | | | directly that applies. No quote, could be Unfair Claim |
| you tell what actions are just simply annoyingly poor | | | | Practice. |
| customer service, and what actions violate the law? | | | | * Attempting to persuade insureds not to invoke and |
| How do you know if your insurance company is | | | | use the arbitration process. Also, an insurance |
| treating you fairly and lawfully after you have filed an | | | | company is prevented from appealing almost all of |
| insurance claim? | | | | the arbitration awards in favor of policyholders as a |
| Every state has Unfair Claims Practices regulations to | | | | way to force a settlement of claims. |
| protect policyholders and claimants from being | | | | * Misrepresenting significant facts or insurance policy |
| abused by insurance companies in the claims process. | | | | provisions. Insurance companies sometimes deny |
| A state regulator's primary task is protecting the | | | | claims on their misinterpretation of the policy. Then, |
| interests of insurance consumers. Check with your | | | | it's up to you to change their minds. |
| state's Department of Insurance to find out the | | | | * Refusing to tell an insured what is happening with a |
| regulations in your state. | | | | loss within a reasonable time after receiving a |
| Let me give you some examples of Unfair Claims | | | | completed proof of loss statement. Many policies |
| Practices: | | | | require the insurance company to accept or deny the |
| * Attempting to settle a claim based on an application | | | | proof of loss within 30 days after receiving it. It's in |
| which the company changed without the insured's | | | | your policy...read it. |
| knowledge or permission. The simplest example of | | | | * Denying claims without a reasonable loss |
| this is when an insurance company changes the date | | | | investigation. The problem comes with the definition |
| of the application. But it could be any information on | | | | of "reasonable." Still, insurers sometimes try to settle |
| the application that might be altered. | | | | a claim using a "lowball settlement offer" without |
| * Failing to act promptly after receiving information | | | | much investigation, just to see if they can make the |
| concerning an insurance claim. Many states require | | | | claim go away. |
| response within 15 days. When there's a storm like | | | | * Offering very low settlements to encourage |
| Katrina, you might have to wait weeks to meet your | | | | insureds to sue. That would cause the length of time |
| adjuster. But that might be an Unfair Claims Practice. | | | | for a claim settlement to stretch out, possibly for |
| * Delaying a claim investigation by requiring | | | | years. The only ones who benefit from that delay |
| unnecessary reports or documents which contain | | | | are the insurance company...and the attorneys |
| substantially the same information. Recently I | | | | * Settling claims for less than the amounts a |
| witnessed a major well-known insurance company | | | | reasonable person would expect. Insurance |
| send a claim to their Special Investigations Unit (SUI), | | | | companies regularly make "lowball offers" for |
| and then take recorded statements from the | | | | settlements to their own policyholders as well as |
| insureds...and then ask the insureds to submit to an | | | | third-party claimants. The insurers will pay the LEAST |
| Examination Under Oath. In my opinion, that was | | | | amount of money in a settlement that the |
| Unfair Claims Practice perpetrated by that insurance | | | | policyholders or claimants will accept...always. That's |
| company. | | | | one way to maximize profits. |
| * When applicable, failing to pay a claim quickly, fairly | | | | If you think that your insurance company examiner |
| and equitably. Unethical insurance companies could | | | | or adjuster is has committed an Unfair Claims |
| just stonewall you by telling you it is still investigating | | | | Practices action, talk to that person's supervisor. If |
| your claim. | | | | the situation doesn't improve or get entirely resolved, |
| * Failing to promptly settle claims where liability is | | | | file a complaint with your state's insurance |
| reasonably clear under one portion of the policy to | | | | department. |
| influence settlements under any portion of the | | | | |