Which of the following is not an example of an unfair claims practice?

• A. Setting a time limit for submitting proof of loss
• B. Paying claims promptly
• C. Investigating claims promptly
• D. Denying claims without adequate investigation

Answer: (D)

Unfair claims practices are actions by an insurer that hinder a fair and timely settlement of a claim. Paying claims promptly shows proper, fair handling and is not an unfair practice. Similarly, investigating claims promptly reflects appropriate diligence and fairness in assessing eligibility for coverage. Setting a reasonable time limit for submitting proof of loss is a standard part of claims handling and isn’t inherently unfair if it’s reasonable and consistent with the policy terms; problems arise only if the deadline is used to unjustly deny valid claims. Denying claims without adequate investigation, however, is unfair because it withholds payment without giving the claim a proper review of the facts and policy terms. So the behavior that is not an unfair practice is paying claims promptly (and, by extension, promptly investigating claims).