What defines an Unfair Insurance Practice?

An Unfair Insurance Practice is defined primarily by violations of regulations designed to ensure fair treatment of policyholders and claimants. The Unfair Claim Settlement Practices Act specifically outlines behaviors that are deemed unfair in handling insurance claims, including failing to acknowledge claims in a timely manner, not conducting a reasonable investigation, and failing to settle claims promptly when liability is clear. By violating these principles, an insurance company or broker engages in practices that can harm consumers and undermine the integrity of the insurance industry.

This connection to the Unfair Claim Settlement Practice Act makes this option particularly relevant, as it directly addresses the legal framework governing how insurers should conduct themselves regarding claims and settlements. Understanding this definition provides a solid foundation for recognizing other unfair practices that may occur in the broader context of insurance.