Besides your policy, there are at least two other legal authorities that affect the claim process. One of them is Case Law and the other is State Insurance Law. Both of these can change at any time, and although keeping track of case law is the job for a full time attorney, most states maintain websites offering public access to current insurance law.
For a relatively brief overview of the laws pertaining to insurance claims, see if your state has adopted a version of the Unfair Claims Settlement Practices Act. Keep a copy of it and be at least familiar with its content. This section provides you with a condensed version of the rules that govern how a claim is supposed to be handled. It is usually only a few pages long and is fairly readable, particularly when compared to reading legal texts.
Paraphrasing the California code section, these unfair practices include:
- Misrepresenting to claimants any pertinent facts or insurance policy provisions.
- Failing to acknowledge or act reasonably promptly upon communications with respect to claims.
- Failing to affirm or deny coverage of claims in writing within a reasonable time after “Proof of Loss” requirements are completed.
- Failing to act in good faith to effectuate prompt, fair, equitable settlements.
- Forcing insureds to instigate litigation to recover amounts due by offering less than the amounts ultimately recovered.
- Attempting to settle a claim by an insured for less than the amount to which he/she is reasonably entitled by referencing advertising material accompanying an application.
- Attempting to settle a claim on the basis of an application which was altered without notice to the insured.
- Failing, after payment of a claim, to inform insureds, upon request by them, of the coverage under which payment was made.
- Telling insureds or claimants that the insurer typically appeals arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept a smaller settlement award or compromise.
- Delaying the investigation or payment of claims by requiring a preliminary claim report and then requiring subsequent submission of formal Proof of Loss forms, both of which contain substantially the same information.
- Failing to settle claims promptly under one portion of the insurance policy coverage in order to influence settlements under other portions of the policy coverage.
- Failing to provide a reasonable explanation based on the facts or applicable law of a denial or offer of a compromise settlement.
- Directly advising a claimant not to obtain the services of an attorney.
- Misleading a claimant as to the applicable statute of limitations.
For the full text of the California Fair Claims Practice act, call the California Department of Insurance at 800-927-4357 (from within California) or 213-897-8921 (outside California) or go to www.insurance.ca.gov and search for Fair Claims Amendments