Unfair Claims Practice
Candlefocus EditorMost states that have enacted such laws provide insureds with a private right of action, allowing them to take action in civil court if they believe their insurer is engaging in unfair claims practices. The state-level laws may provide different remedies for different situations, such as ordering the insurer to pay the claim or to restore all or part of the value of the claim or to cover the insured's legal expenses.
Insurance companies are prohibited from engaging in a variety of unfair claims practices, such as failing to acknowledge or investigate a claim in a timely manner; misrepresenting coverage; failing to explain policy provisions, risks and conditions; denying payment of claims without conducting an adequate investigation; refusing to pay a claim without any apparent legal or contractual grounds; and making payments that are unreasonably delayed.
Unfair claims practices can have serious consequences for the insured. They may be forced to wait longer to get the money they are owed, or they may not receive the full amount they are entitled to. The laws are designed to protect the insured from such behavior, and penalties may be imposed on insurers who violate these laws.
The best defense against unfair claims practices is for consumers to remain proactive. They should obtain copies of their insurance policies and any correspondence related to the claims process. They should also regularly check in with their insurer to ensure that their claims are being processed in a timely manner. Additionally, consumers should research the Fair Claims Settlement Practices Act for the state in which they live to gain a better understanding of their legal rights when it comes to an insurer's claims settlement practices. If a consumer feels that an insurer is engaging in unfair practices, they can file a complaint with their state's insurance department or take legal action. Doing so can protect the consumer's rights and hold the insurer accountable for any unfair practices related to the settling of their claim.