Code of Regs § 2695 et. seq. Summary

The full text of California Code of Regulations, Title 10, Chapter 5, Subchapter 7.5, § 2695 et. seq. is available on the internet at: www.insurance.ca.gov, then click: Consumers / Laws & Regulations / California Code of Regulations / Fair Claims Settlement Practices Regulations.

Or www.insurance.ca.gov/01-consumers/130-laws-regs-hearings/05-CCR/fair-claims-regs.cfm


SUMMARY

Section 2695.1. Preamble

(a) [T]hese regulations [have] the following objectives:

(1) To delineate certain minimum standards for the settlement of claims which constitute an unfair claims settlement practice;

(2) To promote the good faith, prompt, efficient and equitable settlement of claims on a cost effective basis; ***

(b) These regulations are not the exclusive definition of all unfair claims settlement practices.

(f) All licensees shall have thorough knowledge of the regulations.


Section 2695.2. Definitions As used in these regulations:

(c) “Claimant” means a first or third party claimant, an attorney authorized to represent the claimant.

(d) “Claims agent” means any person authorized by an insurer to conduct an investigation of a claim on behalf of an insurer.

(f) “First party claimant” means any person asserting a right under an insurance policy as [an] insured.

(i) “Insurer” means [one] licensed to issue an insurance policy.

(j) “policy” means the written instrument in which any contract of insurance is set forth.

(k) “Investigation” means all activities related to the determination of coverage, liabilities, or nature and extent of damages afforded by an insurance policy and other duties arising from an insurance policy.

(l) “Knowingly committed” means performed with knowledge.

(m) “Licensee” means any person that holds a license required before transacting business.

(n) “Notice of claim” means any notification to an insurer the claimant wishes to make a claim

(q) “Person” means any individual, or other entity;

(s) “Proof of claim” means any documentation which provides any evidence of the claim and that supports the magnitude or the amount of the claimed loss.


Section 2695.3. File and Record Documentation

(a) Every claim file shall contain all documents which reasonably pertain to events and dates can be reconstructed and the licensee’s actions determined;

(b) … all insurers shall: (2) record in the file the date received, processed and transmitted relevant document in the file; and


Section 2695.4. Representation of Policy Provisions and Benefits

(a) Every insurer shall disclose to a first party claimant all benefits, coverage, time limits or other provisions of any insurance policy. When additional benefits might reasonably be payable, the insurer shall immediately communicate this fact and cooperate with and assist the insured in determining the extent of the insurer’s additional liability.

(e) No insurer shall: (1) request that a claimant sign a release that extends beyond the subject matter which gave rise to the claim payment.

(f) No insurer shall issue checks in partial settlement releasing the insurer


Section 2695.5. Duties upon Receipt of Communications

(b) Upon receiving any communication from a claimant, regarding a claim, that reasonably suggests that a response is expected, every licensee shall immediately, but in no event more than fifteen (15) calendar days after receipt of that communication, furnish the claimant with a complete response based on the facts as then known by the licensee. This subsection shall not apply to require communication with a claimant subsequent to receipt by the licensee of a notice of legal action by that claimant.

(e) Upon receiving notice of claim, every insurer … shall immediately, but in no event more than fifteen (15) calendar days later: (1) acknowledge receipt; (2) provide to the claimant reasonable assistance; (3) begin any necessary investigation of the claim.

(f) An insurer may not require that notice be provided in writing.


Section § 2695.6 Training and Certification

(a) Every insurer shall adopt and communicate written standards for the prompt investigation and processing of claims.

(b) All [insurers] shall provide training regarding these regulations [and] certify that their claims agents have been trained [by] annually certify in writing under penalty of perjury that he or she has read and understands these regulations.

(2)(A) the licensee’s claims manual contains a copy; and, (B) written instructions regarding the procedures to be followed.


Section 2695.7. Standards for Prompt, Fair and Equitable Settlements

Upon receiving proof of claim, every insurer shall immediately, but in no event more than forty (40) calendar days later, accept or deny the claim, in whole or in part. (1) Where an insurer denies or rejects a first party claim, in whole or in part, it shall do so in writing and shall provide to the claimant a statement listing all bases for such rejection or denial and the factual and legal bases for each reason given for such rejection or denial which is then within the insurer’s knowledge. Where an insurer’s denial of a first party claim, in whole or in part, is based on a specific policy provision, condition or exclusion, the written denial shall include reference thereto and provide an explanation of the application of the provision, condition or exclusion to the claim. Every insurer that denies or rejects a third party claim, in whole or in part, or disputes liability or damages shall do so in writing.

(3) Written notification shall include that the claimant may have the matter reviewed by the California Department of Insurance.

(c)  (1) If more time is required then every insurer shall provide the claimant with written notice of the need for additional time specify[ing] reasons, every thirty (30) days.

(d) No insurer shall persist in seeking information not reasonably required for or material to the resolution of a claim dispute.

(e) No insurer shall delay or deny settlement of a first party claim on the basis that responsibility for payment should be assumed by others.

(g) No insurer shall attempt to settle a claim by making a settlement offer that is unreasonably low.

(h) Upon acceptance of the claim every insurer shall immediately, but in no event more than thirty (30) calendar days later, tender payment.

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