31A-26-303 - Unfair claim settlement practices.
31A-26-303. Unfair claim settlement practices.
(1) No insurer or person representing an insurer may engage in any unfair claimsettlement practice under Subsections (2), (3), and (4).
(2) Each of the following acts is an unfair claim settlement practice:
(a) knowingly misrepresenting material facts or the contents of insurance policyprovisions at issue in connection with a claim under an insurance contract; however, thisprovision does not include the failure to disclose information;
(b) attempting to use a policy application which was altered by the insurer without noticeto, or knowledge, or consent of, the insured as the basis for settling or refusing to settle a claim;or
(c) failing to settle a claim promptly under one portion of the insurance policy coverage,where liability and the amount of loss are reasonably clear, in order to influence settlementsunder other portions of the insurance policy coverage, but this Subsection (2)(c) applies only toclaims made by persons in direct privity of contract with the insurer.
(3) Each of the following is an unfair claim settlement practice if committed orperformed with such frequency as to indicate a general business practice by an insurer or personsrepresenting an insurer:
(a) failing to acknowledge and act promptly upon communications about claims underinsurance policies;
(b) failing to adopt and implement reasonable standards for the prompt investigation andprocessing of claims under insurance policies;
(c) compelling insureds to institute litigation to recover amounts due under an insurancepolicy by offering substantially less than the amounts ultimately recovered in actions brought bythose insureds when the amounts claimed were reasonably near to the amounts recovered;
(d) failing, after payment of a claim, to inform insureds or beneficiaries, upon request bythem, of the coverage under which payment was made;
(e) failing to promptly provide to the insured a reasonable explanation of the basis fordenial of a claim or for the offer of a compromise settlement;
(f) appealing from substantially all arbitration awards in favor of insureds for the purposeof compelling them to accept settlements or compromises for less than the amount awarded inarbitration;
(g) delaying the investigation or payment of claims by requiring an insured, claimant, orthe physician of either to submit a preliminary claim report and then requiring the subsequentsubmission of formal proof of loss forms which contain substantially the same information; or
(h) not attempting in good faith to effectuate a prompt, fair, and equitable settlement ofclaims in which liability is reasonably clear.
(4) The commissioner may define by rule, acts or general business practices which areunfair claim settlement practices, after a finding that those practices are misleading, deceptive,unfairly discriminatory, overreaching, or an unreasonable restraint on competition.
(5) This section does not create any private cause of action.
Amended by Chapter 91, 1987 General Session