No insurer doing business in this state under the authority, rules and regulations of this code shall engage in unfair claim settlement practices.
Any of the following acts by an insurer shall constitute unfair claim settlement practices:
1. Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverage’s at issue;
2. Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;
3. Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims submitted in which liability has become reasonably clear;
4. Compelling policyholders to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by the insurer;
5. Failure of any insurer to maintain complete record of all the complaints which it has received during the preceding three years or since the date of its last examination by the commissioner, whichever time is shorter.
Unfair Methods of Competition and Unfair or Deceptive Acts or Practices Defined:
• Misrepresenting to a claimant a material fact or policy provision relating to coverage- at issue;
• Failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear;
• Failing to provide promptly to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or for the offer of a compromise settlement of a claim;
Failing within a reasonable time to:
• affirm or deny coverage of a claim to a policyholder; or
• submit a reservation of rights to a policyholder;
• Refusing, failing, or unreasonably delaying an offer of settlement under applicable first-party coverage on the basis that other coverage may be available or that third parties are responsible for the damages suffered, except as may be specifically provided in the policy;
Undertaking to enforce a full and Final release of a claim from a policyholder when only a partial payment has been made, provided that this prohibition does not apply to a compromise settlement of a doubtful or disputed claim;
• Refusing to pay a claim without conducting a reasonable investigation with respect to the claim;
• Requiring a claimant. as a condition of settling a claim, to produce the claimant’s federal Income tax returns for examination or investigation by the person unless:
1. The claimant is ordered to produce those tax returns by a court
2. The claim involves a fire loss; or
3. The claim involves lost profits or income.
Misrepresenting an Insurance Policy
• Making an untrue statement of material fact.
• Failing to state a material fact that is necessary to make other statements made not misleading, considering the circumstances under which the statements were made.
• Making a statement in such manner as to mislead a reasonably prudent person to a false conclusion of a material fact;
• Making a material misstatement of law; or
• Failing to disclose any matter required by law to be disclosed, including a failure to make disclosure in accordance with another provision of this code.
Defamation – Any false, or maliciously critical of or derogatory to the financial condition of any insurer, and which is calculated to injure any person engaged in the business of insurance.
Rebate – The offering or paying to a prospective insured part of the paid premium as an inducement to purchase the insurance.