Every claims representative likely considers the insurer's general duty of good faith and fair dealing when they receive notice of a new claim, or at least they should. But what is “fair” when it comes to handling property and casualty claims? Unfortunately, the answer could be different in each of the 50 states. On one hand, each state has provided a starting point for that consideration by issuing either a statutory or regulatory legal standard advancing required and unfair actions or practices in handling and settling property and casualty claims.

Most states utilize some version or portion of the National Association of Insurance Commissioners (“NAIC”) Model Unfair Claims Settlement Practices Act or Model Unfair Property/Casualty Settlement Practices Regulations. However, each state has its own modification or specialization of those model legal authorities, or has enacted its own unique laws in order to accomplish the same goal or purpose.

Generally, the purpose of these laws is to set forth minimum standards for the investigation and disposition of property and casualty claims under insurance contracts (utilizing the purpose set out by NAIC in the model statutes and regulations). These minimum standards are all basically protections for each individual presenting a claim to an insurer, whether an insured or third-party claimant.