The "Farmers Insurance News-Alert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group. This includes fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources, when known are sited.
How the Unfair Claims Settlement Practices Act can help you
By Les Abromovitz
You may feel particularly vulnerable when filing a claim, especially if you aren't familiar with the process of making claims and getting payments. Fortunately, your state has specific regulations that protect you against unfair claims settlement practices, such as slow or deceptive claims handling.
Every state has laws that prohibit unfair, discriminatory, or deceptive insurance practices. These regulations define what is acceptable conduct in the insurance industry and cover everything from sales practices to policy cancellation. If you're looking for regulations in your state, you may find them tucked in a broader law that applies to all kinds of trade practices and to fraud, or there may be something called an "Unfair Insurance Practices Act" or an "Unfair Claims Settlement Practices Act." It's a mouthful, but you may be surprised how often you can get the law to work in your favor when you're having trouble with your insurer.
Claims practices that are verboten will be similar from state to state because they are based on a model act developed by the National Association of Insurance Commissioners (NAIC). NAIC model acts are generally adopted by all states, but since states may tweak theirs first, your state's law will likely be slightly different from your neighboring state's. To find out more about how the law works in your state, contact your state's insurance department.
Most state laws concerning this topic make a distinction between an insurance company's own customers and a third-party claimant. For example, if you cause an accident, you would file a claim with your own insurance company. But if another driver damages your car, you would file a claim with his insurance company and in that case, you are the third-party claimant. Generally, an insurance company has more of an obligation to its own customers.
Hey! They can't do that!
Can't misrepresent your
Can't influence other policy
Must acknowledge your claim
Must process your claim
No delays for extra forms
Can't force you to sue
Can't appeal lots of claims
Can't refuse or delay claims
without a darn good reason
Nuts and bolts Your state may even have implemented standards for resolving specific types of claims. For instance, your state may stipulate what types of replacement car parts are permitted after an accident and how a total car loss should be compensated.
What to do if you've been wronged
If you suspect that your insurance company, agent, or adjuster is violating the Unfair Claims Practices Act, talk to the individual's supervisor! If you don't get any satisfaction, file a complaint with your state's insurance department.
State insurance regulators investigate these practices, and a number of similar complaints against a particular insurance company could trigger a market-conduct examination. Regulators will then determine if the company is in compliance with applicable insurance regulations.
If regulators find a pattern of misconduct, they will fine an insurance company or take other punitive action. In extreme cases, the state may even revoke a company's right to do business.
The unfair claims settlement practices act in your state may not apply to every type of claim. For instance, the act may not apply to surety, malpractice, or workers compensation claims.
What the law can and can't do for you
In a few jurisdictions, you can point to violations of the Unfair Claims Settlement Practices Act as a basis for a bad-faith action against your insurance company, and a company that makes a practice of violating the act may be subject to punitive damages.
In an overwhelming majority of states, however, violations of the unfair claims settlement practices act won't allow you to sue a company privately. Nevertheless, catching your insurer in the act does give you some leverage in your negotiations with the company.
Last updated Feb. 4, 1999
|Attention! All information contained herein is for educational purposes only. No copyright infringement is intended by any material on these pages. The copyrights of the whole multimedia content on these pages are belonging to their originators, authors, creators... etc. All original content is the property of it's originators. Copyrighted material has been used for non-commercial purposes only. This website is best viewed with your monitor resolution set to 800x600 and your video mode set to true color.|