The Act then defines Unfair Claim Practices as consisting of the following actions:

“A. Knowingly misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue;

B. Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;

C. Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims arising under its policies;

D. Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear;

E. Compelling insureds or beneficiaries to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;

F. Refusing to pay claims without conducting a reasonable investigation;

G. Failing to affirm or deny coverage of claims within a reasonable time after having completed its investigation related to such claim or claims;

H. Attempting to settle or settling claims for less than the amount that a reasonable person would believe the insured or beneficiary was entitled by reference to written or printed advertising material accompanying or made part of an application;

I. Attempting to settle or settling claims on the basis of an application that was materially altered without notice to, or knowledge or consent of, the insured;

J.Making claims payments to an insured or beneficiary without indicating the coverage under which each payment is being made;

K. Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form;

L. Failing in the case of claims denials or offers of compromise settlement to promptly provide a reasonable and accurate explanation of the basis for such actions;

M. Failing to provide forms necessary to present claims within fifteen (15) calendar days of a request with reasonable explanations regarding their use;

N. Failing to adopt and implement reasonable standards to assure that the repairs of a repairer owned by or required to be used by the insurer are performed in a workmanlike manner. “

It’s clear that claims must be handled in a timely manner, fairly, truthfully, and according to policy language, and in accordance with any advertised benefits. Any forms required by the insurer must be provided to the insured/claimant within a reasonable time and settlement offers must be fair, related to the claim, and made in a timely manner.

The Act then states that whenever the commissioner has reasonable cause to believe that an insurer doing business in the state is engaging in unfair claim practices and that a proceeding in respect thereto would serve the public interest, that the commissioner shall issue and serve to the insurer in question a statement of charges and a notice of hearing, which sets a hearing date not less than thirty days from the date of the notice.

If, after a hearing, the commissioner finds that the insurer engaged in unfair claims practices, the commissioner will provide the insurer with a copy of the findings and issue a cease and desist order to cease from engaging in the act or practice in question. The commissioner may then order payment of a penalty of not more than $1,000 for each violation but not more than $100,000 in aggregate, unless the violation was flagrant and in conscious disregard for the Act, then the penalty will not be more than $25,000 per violation and not to exceed $250,000 in aggregate. The insurer’s license may also be suspended or revoked if the insurer knew or reasonably should have known that the acts committed violated the Act.

If an insurer violates the cease and desist order, the commissioner may issue a penalty of not more than $25,000 per each act or violation, not to exceed an aggregate of $250,000, and may also suspend or revoke the insurer’s license.

The commissioner may promulgate rules, regulations, and orders to carry out the provisions of the Act that the state has adopted. The Act contains a severability clause, so that if any provision of the Act is found to be invalid, the remainder of the Act will not be affected.

Most states have adopted statutes or regulations that are similar to the Act. Many states have adopted additional statutes that refine the Act and provide even more protection to the insured or claimant. A chart detailing what states have adopted can be found below.