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Faithfully handling your premium payments creates the expectation that your insurance company will investigate and, if applicable, pay for a loss. Loss payment includes taking care of expenses associated with settling a loss or handling the defense costs of a lawsuit.

In most instances, disputes with an insurance company are legitimate disagreements. Parties may, justifiably, hold different positions on whether a certain loss is covered or, if covered, the amount of the loss. It is unfortunate, but sometimes an insurance company may have an attitude toward paying claims that fails to meet your expectations. In fact, a company may actually deal with you unfairly. Your right to fair treatment is, generally, protected under state law. 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 insurers fairly settle valid claims against their policies. Insurance companies and agents operating within a state are also provided with complete information regarding unacceptable claims practices. A state's rules on settling 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.

  • Attempting to settle a claim based on an application which the company has changed without the insured's knowledge or permission
  • Delaying a claim investigation by requiring unnecessary reports or documents
  • Failing to act promptly after receiving information concerning an insurance claim
  • Failing to comply with prompt claims investigation standards
  • When applicable, failing to pay a claim quickly, fairly and equitably
  • Failing to promptly settle claims where liability is reasonably clear under one portion of the policy to influence settlement under any other portion of the insurance policy coverage
  • Make it a standard practice to file judicial appeals on trial judgments
  • Failing to promptly and clearly explain the basis in the policy or the law for either denying a claim or offering a compromise settlement
  • Require policyholders to travel unreasonable distances to use specific repair shops (for estimates and/or repairs)
  • Discouraging a policyholder from using arbitration
  • Misrepresenting significant facts or insurance policy provisions
  • Refusing to keep an insured informed of claim developments within a reasonable time after receiving a completed proof of loss statement
  • Denying claims without a reasonable loss investigation
  • Offering very low settlements to encourage policyholder to sue
  • Settling claims for amounts that are lower than a reasonable person would expect

The best way to avoid problems is to deal with reputable agents and companies who are committed to properly serving their customers. Your insurance agent would be happy to discuss your concerns and/or expectations about making an insurance claim. Take advantage of his or her expertise.