A florist's delivery van loses control and crashes into a neighboring cafe, causing structural damage and injuring the cafe owner. The cafe owner files claims against the florist's commercial auto liability policy for both property damage and bodily injury. Under standard state regulations, which of the following actions by the assigned insurance adjuster would explicitly violate Unfair Claims Settlement Practices regulations? (Select all that apply)
- Withholding payment for the undisputed structural damage to pressure the cafe owner into accepting a lower bodily injury settlement.Answer
- Issuing a formal denial of coverage for the lost business income without citing the specific policy exclusion or legal basis for the decision.Answer
- CNotifying the claimant in writing before the statutory deadline that the investigation requires an extension to secure the official police accident report.
- DProviding official acknowledgment of the initial claim notification on the twelfth day after the claim was first reported by the claimant.
Answer
The violations include withholding undisputed property damage payments to leverage a bodily injury settlement, and denying a claim without citing a specific policy exclusion.
The correct violations highlight two specific prohibited acts under the NAIC model act: using leverage between different policy coverages to force a cheap settlement, and failing to provide a clear, policy-based rationale for denying a claim.
Step-by-Step Solution
Key Concept
Statutory prohibitions against leveraging coverages and failing to provide policy-based explanations for denials.
Estimated Time:1m 30s