How it works
The NAIC's model law on unfair claims settlement practices, which states can adopt in their own form, lists conduct that counts as unfair, including:
- not attempting in good faith to reach a prompt, fair and equitable settlement once liability has become reasonably clear,
- refusing to pay a claim without a reasonable investigation,
- forcing policyholders to sue to collect what the policy owes.
Under that model, the state insurance commissioner enforces the rules, and it does not by itself give consumers a right to sue. Some states add a separate civil remedy. Florida, for example, lets a damaged person sue an insurer that did not try in good faith to settle a claim when it could and should have, after first giving written notice and a chance to fix the problem. Florida's law also says that negligence alone is not enough to show bad faith.
A low offer or a slow claim is not automatically bad faith. If you think a claim was mishandled, you can complain to your state insurance department or speak with a lawyer licensed in your state.
Related terms
Sources
- NAIC, Unfair Claims Settlement Practices Act (Model 900) list of unfair claims practices, commissioner enforcement, no private right of action
- Florida Statutes, Section 624.155 civil remedy, notice requirement, negligence alone not bad faith
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