Ins. Code § 790.03 and Cal. Code of Regs. § 2695 – Summary

 Just as motorists must obey the standards established by the Vehicle Code, such as speed limits, so liability insurers must conduct themselves in compliance with statutory and regulatory standards established by the legislature as the California Unfair Insurance Practice Laws (Insurance Code § 790.03) and the Department of Insurance as the Fair Claims Settlement Practices Regulations. They define unfair methods of competition and unfair and deceptive acts or practices in the business of insurance.

Adopt and Implement Standards

●          An insurer must adopt reasonable standards for the prompt investigation (determine coverage, liabilities, the nature and extent of damages): (Ins. Cd. §790.03(h)(3).)

●          An insurer must implement reasonable standards for the prompt investigation (determine coverage, liabilities, the nature and extent of damages): (Ins. Cd. §790.03(h)(3).)

●          An insurer must adopt reasonable standards for the prompt processing of claims: (Ins. Cd. §790.03(h)(3).)

●          An insurer must implement reasonable standards for the prompt processing of claims: (Ins. Cd. §790.03(h)(3).)

●          An insurer must begin an investigation within 15 days: (Reg. §2695.5(e)(3)

Communication

●          An insurer must disclose to its policyholder all benefits, coverage, time limits and other provisions of any insurance policy that may apply to the claim presented by the policyholder: (Reg. §2695.4.)

●          An insurer must communicate all additional benefits which might reasonably be payable upon receipt of additional evidence: (Reg. §2695.4.)

●          An insurer must not misrepresent to a policyholder pertinent facts or insurance policy provisions relating to any coverages: (Ins. Cd. §790.03(h)(1))

●          An insurer must not persist in seeking information not reasonably required for or material to the resolution of a claim dispute: (Reg. §2695.7(d)).

●          An insurer must Acknowledge and act upon communications from policyholders no later than 15 days: (Reg. §2695.5(b)(e)).

●          An insurer must provide within 15 days a reasonable explanation of the basis relied on in the insurance policy, in relation to the facts or applicable law, for the denial of a claim: (Ins. Cd. §790.03(h)(13))

●          An insurer must inform policyholders of the coverage under which payment has been made upon request:

●          An insurer must furnish a policyholder with a complete response to an inquiry based on the facts as then known by the insurer within 15 calendar days: (Reg. §2695.5(b)).

●          An insurer must notify the policyholder in writing of any time requirements not less than 60 days before the expiration date, unless the claim has been paid: (Reg. §2695.7(f)).

Cooperate and Assist

●          An insurer must cooperate with and assist the policyholder to determine the extent of the insurer’s additional liability: (Reg. §2695.4; §2695.5(e)(2))

●          An insurer must not compel its policyholder to sue its insurer to recover amount due under an insurance policy: (Ins. Cd. §790.03(h)(6))

Accept or Deny Claims

●          An insurer must accept or deny a claim, in whole or in part within forty (40) days and clearly document in the claim file amounts accepted or denied. (Reg. §2695.7(b):

●          Accept or deny the claim in writing within 40 calendar days stating all then known bases for a denial and the factual and legal bases for the denial, and explaining specific policy provisions and their application, plus a statement that the policyholder may have the matter reviewed by the California Department of Insurance: (Reg. §2695.7(b).)

Try to Settle

●          Attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear: (Ins. Cd. §790.03(h)(5))

●          Make a settlement offer that is below the amount that a reasonable person with knowledge of the facts and circumstances would have offered in settlement of the claim considering the value of the claim, the advise of claims personnel, and a likely jury verdict: (Reg. §2695.7(g)(7)).

●          An insurer must not delay or deny settlement of a claim on the basis that responsibility for payment should be assumed by others: (Reg. §2695.7(e)).

●          An insurer must tender payment of the
undisputed amount of a claim within 30 calendar days, upon receipt of a properly executed release: (Reg. §2695.7(h).)

Maintain Records

●          An insurer must maintain a claim file which contains all documents pertaining to a claim which are legible: (Reg. §2695.3(a); §2695.5(e)(1).)

Train Personnel

●          An insurer must provide thorough and adequate training regarding insurance regulations to its claims personnel, certify in writing under oath that the claims manual has a copy of the regulations, and certify in writing that it provided required training. (Reg. §2695.6(b)).

●          An insurer must adopt and communicate to all its claims agents written standards for the prompt investigation and processing of claims: (Reg. §2695.6(a).)

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