Do Insurance companies care about Unfair Settlement Practices are reported to the Insurance Commissioner?

UPDATED: Jun 5, 2018

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My house suffered devastating fire with 99% of my personal property destroyed. Unfair Claims Settlement Practice violations:

  1. The home and the personal property adjuster misled me several times – email and message boards – regarding my homeowner’s policy benefits to the potential loss of over $100,000 in benefits. 
  2. Receipts submitted literally over 1,000 days ago are not yet processed. A small batch of items a month later are processed after repeated complaints to his supervisor.
  3. The home inventory for a 6-bedroom, 5-bath home with almost 5,000 livable sq ft was 512 items long. The garage, which was used for storage and contained over 500 items, was not inventoried because of false claims it was locked up (she took photographs of the garage, so couldn’t be true). Large items of significant value were also omitted from her inventory report.

There are additional examples, but these are the main three items. In my state the violation of the Unfair Settlement Practices Act entails a 50% penalty on the coverage amount – for me, that’s about $150,000.

We’ve invested well over 350 hours working on the inventory report, going through old pictures, researching brand of items, etc. – effectively did one of the main responsibilities of an adjuster. I want to be compensated for this time, energy and frustration – thinking $50,000 as an invoice amount from a company I own for “Insurance Benefits Consulting.” I’ll be upfront about this is as a payment to us. 

They’re aware of my familiarity with UCSPA and the evidence to prove violations. I’ve stated, “Unless convinced and persuaded otherwise, I will report her irrefutable, well-documented violations of XX Code § 55-5-12 (2017) Unfair Claims Settlement Practices to the Insurance Commissioner. The allegations of failure to fulfill a fiduciary duty, failure to exercise due care (negligence) in the claim investigation and “bad faith” handling of this claim
will be thoroughly investigated.”

A thinly-veiled threat? Blackmail? Extortion? I don’t know. Any guidance adjusters or other insurance professionals out there can offer would be greatly appreciated. 

Asked June 5, 2018

1 Answer

Yes, insurance companies do care about unfair settlement claims made to the state specific state’s insurance commissioner. An unfair claims practice is one in which the insurance company attempts to avoid paying off a claim altogether or by improperly reducing the amount of coverage payoff on the claim. When an insurance company engages in such practices it is usually vigorously attempting to reduce the costs of claim settlements. However, if an unfair claims practice is reported to the state insurance commissioner by the insured and it is confirmed that the law has been violated then the company is at risk for significant legal and financial penalties.

When an insurance company is forced to litigate these unfair practice claims it requires a significant outlay of resources and capital. Many times the end result is that when an insurance company is required to contest legitimate unfair settlement claims made by its customers it is more cost effective for the company to come to an agreement regarding the settlement claim rather than risk the consequences of violating state law.

Answered June 11, 2018 by FirstLight

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