The following are hereby defined as unfair methods of
competition and unfair or deceptive acts or practices of the insurer in the
business of insurance, specifically applicable to the settlement of
(1) Misrepresenting pertinent
facts or insurance policy provisions.
(2) Failing to acknowledge and act reasonably
promptly upon communications with respect to claims arising under insurance
(3) Failing to adopt and
implement reasonable standards for the prompt investigation of claims arising
under insurance policies.
Refusing to pay claims without conducting a reasonable investigation.
(5) Failing to affirm or deny coverage of
claims within a reasonable time after fully completed proof of loss
documentation has been submitted.
(6) Not attempting in good faith to
effectuate prompt, fair and equitable settlements of claims in which liability
has become reasonably clear. In particular, this includes an obligation to
promptly pay property damage claims to innocent third parties in clear
liability situations. If two or more insurers share liability, they should
arrange to make appropriate payment, leaving to themselves the burden of
Compelling a first party claimant to initiate or submit to litigation,
arbitration, or appraisal to recover amounts due under an insurance policy by
offering substantially less than the amounts ultimately recovered in such
actions or proceedings.
Attempting to settle a claim for less than the amount to which a reasonable
person would have believed he or she was entitled by reference to written or
printed advertising material accompanying or made part of an
(9) Making a claim
payment to a first party claimant or beneficiary not accompanied by a statement
setting forth the coverage under which the payment is made.
(10) Asserting to a first party claimant a
policy of appealing arbitration awards in favor of insureds or first party
claimants for the purpose of compelling them to accept settlements or
compromises less than the amount awarded in arbitration.
(11) Delaying the investigation or payment of
claims by requiring a first party claimant or his or her physician to submit a
preliminary claim report and then requiring subsequent submissions which
contain substantially the same information.
(12) Failing to promptly settle claims, where
liability has become reasonably clear, under one portion of the insurance
policy coverage in order to influence settlements under other portions of the
insurance policy coverage.
Failing to promptly provide a reasonable explanation of the basis in the
insurance policy in relation to the facts or applicable law for denial of a
claim or for the offer of a compromise settlement.
(14) Unfairly discriminating against
claimants because they are represented by a public adjuster.
(15) Failing to expeditiously honor drafts
given in settlement of claims. A failure to honor a draft within three working
days after notice of receipt by the payor bank will constitute a violation of
this provision. Dishonor of a draft for valid reasons related to the settlement
of the claim will not constitute a violation of this provision.
(16) Failing to adopt and implement
reasonable standards for the processing and payment of claims after the
obligation to pay has been established. Except as to those instances where the
time for payment is governed by statute or rule or is set forth in an
applicable contract, procedures which are not designed to deliver payment,
whether by check , draft, electronic funds transfer, prepaid card, or other
method of electronic payment to the payee in payment of a settled claim within
fifteen business days after receipt by the insurer or its attorney of properly
executed releases or other settlement documents are not acceptable. Where the
insurer is obligated to furnish an appropriate release or settlement document
to a claimant, it must do so within twenty working days after a settlement has
appraisals or adding to their cost under insurance policy appraisal provisions
through the use of appraisers from outside of the loss area. The use of
appraisers from outside the loss area is appropriate only where the unique
nature of the loss or a lack of competent local appraisers make the use of
out-of-area appraisers necessary.
(18) Failing to make a good faith effort to
settle a claim before exercising a contract right to an appraisal.
(19) Negotiating or settling a claim directly
with any claimant known to be represented by an attorney without the attorney's
knowledge and consent. This does not prohibit routine inquiries to a first
party claimant to identify the claimant or to obtain details concerning the