Insurance Law: Unfair Claims Practices Act

Unfair Claims Practices Act

Georgia’s Unfair Claims Settlement Practices Act is designed “to set forth standards for the investigation and disposition of claims arising under policies or certificates of insurance issued to residents of Georgia.” The UCSPA does not cover claims involving workers’ compensation, fidelity, or surety insurance. The Act sets out fourteen acts that constitute unfair claims settlement practices when committed.

 

 

The 14 Acts That Constitute Unfair Claims Settlement Practices

(1) flagrantly and in conscious disregard of the insurance laws of the State of Georgia

(2) with such frequency so as to indicate a general business practice to engage in such conduct. An insurer commits an unfair claims settlement practice by:

• Knowingly misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue.
• Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies.

(3) Failing to adopt and implement procedures for the prompt investigation and settlement of claims arising under its policies.

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

(5) 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.

(6) Refusing to pay claims without conducting a reasonable investigation.

(7) When requested by the insured in writing, failing to affirm or deny coverage of claims within a reasonable time after having completed its investigation related to such claim or claims.

(8) When requested by the insured in writing, making claims payments to an insured or beneficiary without indicating the coverage under which each payment is being made.

(9) Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form; provided, however, this paragraph shall not preclude an insurer from obtaining sworn statements if permitted under the policy.

(10) When requested by the insured in writing, failing in the case of claims denial or offers of compromise settlement to provide promptly a reasonable and accurate explanation of the basis for such actions. In the case of claims denials, such denials shall be in writing.

(11) Failing to provide forms necessary to file claims within 15 calendar days of a request with reasonable explanations regarding their use.

(12) Failing to adopt and implement reasonable standards to assure that the repairs of a repairer owned by the insurer are performed in a workmanlike manner.

(13) Indicating to a first-party claimant on a payment, draft check, or accompanying letter that said payment is final or a release of any claim unless the policy limit has been paid or there has been a compromise settlement agreed to by the first-party claimant and the insurer as to coverage and amount payable under the contract.

(14) Issuing checks or drafts in partial settlement of a loss or claim under a specific coverage which contain language which releases the insurer or its insured from its total liability.

There is no private right of action under the Georgia UCSPA. Rather, the Georgia Insurance Commissioner enforces the UCSPA. Despite the fact that an insured cannot raise a cause of action under the UCSPA, an insured may attempt to use evidence of a violation of the Act as evidence of an insurer’s bad faith.  Courts routinely admit evidence of a state’s unfair claim practices act and regulations in insurance bad faith actions.