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What is an unfair claims insurance practice?

On Behalf of | Sep 7, 2022 | Bad Faith Insurance

Are you a victim of a California insurer that has tried to reduce the award in a valid insurance claim? If so, that could be an instance of unfair claims practice. Whenever an insurer tries to reduce, delay or avoid a claim that should be paid to an insured party, that action could violate the Unfair Claims Settlement Practices Acts (UCSPA).

How am I covered against unfair claims practices?

The National Association of Insurance Commissioners requires that insurance companies handle all claims fairly. Otherwise, they are guilty of bad faith insurance practices. Individual states have enacted their own version of the UCSPA, enforced by each state’s insurance department.

Unfair claims practices can take various forms. For example, an insurance adjuster can repeatedly “forget” to send the proper documents that will result in the payment of a claim. Another common tactic is repeatedly asking for proof of an incident when you have already submitted evidence. Other examples include:

  • Misrepresenting policy facts or provisions
  • Making a significant alteration in a policy claim without your approval or knowledge and then settling the claim
  • Settling a claim for substantially less than what you expected based on an advertising claim

Unpaid claims can stand in the way of your recovery

Unpaid insurance claims can take many different forms. Health care claims are one of the most common types that insurers will try to delay or pay less than you deserve. Others can include claims for long-term disability, structural claims for residential or commercial property, and various types of business claims.

If you believe that an insurance company has failed to meet its legal obligations, you may want to file a bad faith insurance lawsuit. Diligent record-keeping can help you bolster your case in court.