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Difficulty: MediumUnfair Claims Settlement Practices

An insured reports a comprehensive auto claim after their parked vehicle is heavily vandalized. The insurer acknowledges the claim promptly, and the insured submits a fully completed, signed proof of loss form along with repair estimates on April 10th. As of June 25th, the insurer has not contacted the insured, has not requested any additional information, and has not indicated whether the claim will be approved or denied.

Under standard state insurance regulations, which specific Unfair Claims Settlement Practice has the insurer committed?

  1. A
    Failing to acknowledge and act reasonably promptly upon communications with respect to claims.
  2. B
    Refusing to pay claims without conducting a reasonable investigation based upon all available information.
  3. Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.Answer
  4. D
    Failing to promptly provide a reasonable explanation of the basis in the insurance policy for denial of a claim.

Answer

Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.
The correct answer accurately identifies that the insurer violated the requirement to affirm or deny coverage within a reasonable time after receiving a completed proof of loss. While state timeframes vary, a delay of over two months with no communication or request for additional time is universally considered an unreasonable delay under Unfair Claims Settlement Practices regulations.

Step-by-Step Solution

1
Analyze the insurer's initial response to the claim.
The insurer acknowledged the claim promptly.
This rules out the violation of failing to acknowledge communications promptly.
2
Identify the stage of the claims process where the delay occurred.
The delay occurred after the insured submitted a complete proof of loss on April 10th. Over 75 days have passed without a decision.
Insurers are required by law to communicate whether a claim is accepted or denied within a reasonable, specified timeframe after receiving a proof of loss.
3
Match the failure to the specific statutory violation.
The failure is specifically 'failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.'
The insurer did not affirm (approve) or deny the claim within a reasonable time.

Key Concept

Unfair Claims Settlement Practices - Affirming or Denying Coverage
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Topics

Unfair Claims Settlement Practices

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