Unfair Claims Practice? Part 1

The Problem

The complexity of insurance policy can put you at a severe disadvantage when it is time to file a claim. Requesting payment for a loss is under your home, auto, boat or other policy is what insurance is supposed to be about. Youíve paid your premium with the assurance that, should an eligible loss occur, you or your property will be protected. Faithfully handling your premium payments gives you the expectation that your insure will perform." Performance" of the insurance contract refers to the insurance company's obligation to investigate and, if applicable, pay for a loss, including associated expenses for settling a loss or handling the defense of a lawsuit.

Itís unfortunate, but sometimes an insurance company may not have an attitude toward paying claims that meets your expectations. In fact, a company may actually deal with you in a manner that is unfair. Your right to fair dealings is protected by the efforts of individual state governments. States agencies, typically via a special insurance or commerce division are responsible for seeing that insurance companies and agents are true to the commitment represented by the insurance policy.

Most states actively enforce the requirement that all insurers fairly settle valid claims against their policies. The insurance companies and agents operating within a state are also provided with complete information regarding unacceptable claims practices. A state's rules on claims are based on the National Association of Insurance Commissioners (NAIC) Unfair Trade Practices Model Act. The guidelines developed from the original act, and other regulations (which vary by state) are meant to shield you from practices that are misleading, unfair or deceptive.

For more information on such practices, please see part 2 of this article.


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