An independent claims adjuster is handling a commercial liability claim involving both substantial property damage and complex bodily injury. After two weeks of investigation, the insured's liability for the property damage becomes reasonably clear and the exact dollar amount is undisputed. However, the bodily injury portion remains highly contested and requires further independent medical evaluation. Under the NAIC Unfair Claims Settlement Practices Act, which of the following actions by the adjuster would be considered a statutory violation?
- Refusing to pay the undisputed property damage claim in order to influence the claimant into accepting a lower settlement for the pending bodily injury claim.Answer
- BNotifying the claimant in writing after 30 days that the bodily injury investigation remains open and specifying the reasons why additional time is needed.
- CDeclining to pay the property damage claim until the claimant submits a formal, signed proof of loss form as required by the commercial policy conditions.
- DDelaying the bodily injury settlement offer because the claimant's legal representative has not yet responded to a formal request for prior medical records.
Answer
Refusing to pay the undisputed property damage claim in order to influence the claimant into accepting a lower settlement for the pending bodily injury claim.
Under the NAIC Unfair Claims Settlement Practices Act, it is an explicit violation to fail to promptly settle claims where liability has become reasonably clear under one portion of the insurance policy coverage in order to influence settlements under other portions of the coverage. The insurer must pay the undisputed property damage without using it as leverage against the bodily injury claim.
Step-by-Step Solution
Key Concept
Unfair Claims Settlement Practices: Leveraging Undisputed Claims
Estimated Time:1m 30s