After a severe windstorm damages a residential roof, a homeowner files a property claim with their insurer. Which of the following actions by the insurer would be classified as Unfair Claims Settlement Practices under state regulations? (Select all that apply)
- Failing to affirm or deny coverage within a reasonable time after receiving the completed proof of loss statements.Answer
- Attempting to settle the claim for an amount substantially less than what a reasonable person would expect based on the policy language.Answer
- CRequiring the homeowner to submit a formal, sworn proof of loss document before issuing a final settlement check.
- DSending a written acknowledgment of the initial claim notification within five business days of receiving the report.
Answer
The correct answers are failing to affirm or deny coverage promptly after receiving proof of loss, and attempting to settle for an amount substantially less than expected.
State unfair claims practices acts strictly prohibit insurers from employing tactics that unreasonably delay settlements or attempt to force policyholders into accepting unjustifiably low payouts. Failing to act promptly after receiving a proof of loss and offering substantially less than the policy dictates are textbook examples of these prohibited practices.
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Key Concept
Unfair Claims Settlement Practices