Insurance Consumers Are Special - Under The Law

The law recognizes the need for special protection of insurance policyholders from their insurance companies because: 1) People buy insurance for protection, peace of mind, and security against calamity; 2) the protection from calamity and financial ruin that insurance is supposed to provide is so important to the policyholder and to society; 3) policyholders rely on the insurance company's integrity; 4) policyholders are at a disadvantage because they have little if any experience in handling insurance matters; 5) on the other hand, the insurance company is wealthy, sophisticated, and very experienced; and 6) experience has shown that some insurance companies use their financial strength, sophistication, and experience to cheat their customers. Along with the profits obtained from insurance premiums, insurance companies must accept the responsibility to be fair and honest with their customers and follow the law.

1. Be fair, open, and honest with you.
2. Inform you of all facts which might affect your rights or interests.
3. Avoid any conflict between its interests and your interests.
4. Be loyal to you and your interests.
5. Promptly pay benefits that are not disputed.
6. Comply with your reasonable requests.
7. Avoid misrepresenting or concealing facts to gain an advantage over you.
8. Fully and accurately disclose all pertinent benefits, coverages, or other provisions of your policy.
9. Reply within 20 working days after receipt of a communication from you which suggests a response is expected.
10. Adopt and implement reasonable standards for the prompt investigation and processing of claims.
11. Affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted.
12. Make a prompt and fair settlement after its duty to pay has become reasonably clear.
13. Inform you what coverage payments are made under.
14. Promptly explain why it denied your claim.
15. Promptly explain its offer to settle or compromise your claim.

The law prohibits your insurance company from:

1. Refusing to settle with you on the basis that responsibility for payment should be assumed by others, except as provided by policy provisions.
2. Forcing you to file a lawsuit to recover amounts due by offering substantially less than the value of the claim.
3. Attempting to settle your claim for less than a reasonable person would have believed he was entitled by reading written or printed advertising material accompanying or made part of your application.
4. Attempting to settle your claim on the basis of an application which was altered without your knowledge or consent.
5. Delaying the investigation or payment of your claim by requiring you or your physician to submit a preliminary claim report, and then requiring the submission of proof of loss forms which contain substantially the same information.
6. Failing to settle your claim promptly, after its duty to pay has become reasonably clear under one portion of the insurance policy, in order to influence settlement under another portion of the policy.
7. Advising you not to talk to a lawyer.
8. Misleading you concerning any time limit within which a lawsuit must be filed.
9. Treating you differently because of your age, sex, race, national origin, or level of education.
10. Placing its interests above your interests.

If your insurance company violates the law you have a right to sue. In addition to the insurance benefits you are entitled to, your insurance company may have to pay for stress, attorney's fees, and other harm it caused by treating you unfairly or dishonestly. These are called "compensatory damages," and they are paid in addition to payment for your insured loss. You may have the right to have the insurance company pay you an amount to punish its wrongful conduct, if:

1. It gives you false information;
2. Knowingly ignores your rights subjecting you to cruel and unjust hardship;
3. Intentionally harms you; or
4. Obnoxiously disregards your rights.

These are called "punitive damages," and they are assessed in addition to your insured loss and compensatory damages.