Using The Unfair Claims Act To Force The Insurance Company To Behave

With insurance companies claiming to "be on your side" and that "you're covered" to the background of catchy jingles in television commercials, it's easy to forget that these companies are in the business of making money. This means that when you actually submit a claim for an auto accident, you may be subjected to questionably ethical tactics designed to reduce your chances of getting that claim paid. You can counter this behavior in a couple of different ways, and using the Unfair Claims Act can be an effective option.

About the Unfair Claims Act

The Unfair Claims Act goes by different names in different states, but the intent is the same. It is essentially a list of things the insurance company can't do while processing your claim. These prohibitions include:

  • Misrepresenting the insurance policy (e.g. saying something isn't covered when it is)
  • Altering claims in a material way
  • Taking an unreasonably long time to respond to claim requests
  • Denying claims without explanation
  • Intentionally offering a meager settlement to force the policyholder to sue

If an insurance adjuster violates the provisions in the act, the company may be fined up to $25,000 per violation. In some states, you can use the act to sue for damages.

Using the Act to Your Benefit

The Unfair Claims Act is primarily an administrative tool the state government uses to punish companies that fail to adhere to the provisions in the law. As mentioned previously, you can sue the company directly for violations, but this option is only available in a few states.

The power of the Unfair Claims Act rests in its ability to be used as leverage against the insurance company. If the adjuster is behaving in a less than ethical way, advising the person that he or she is running afoul of the act and reminding the individual about the associated financial consequences may lead the person to handle your case in a more honest manner. Many times adjusters who use duplicitous tactics to avoid paying claims rely on the ignorance of policyholders to get away with it. By invoking the law, you demonstrate that you know your rights and that you won't be taken advantage of.

Catching the adjuster violating the act can also be used to score a higher settlement. It's likely the insurance company wouldn't want its customers knowing that it broke the law when handling your claim and may be amendable to giving you more money if you agree to sign a non-disclosure agreement stating you won't publicly discuss the issue.

The Unfair Claims Act is just one tool of many that can be used to make an insurance company handle your claim in a fair manner. For more information about this act or assistance with litigating an accident case, contact a car accident attorney.