Christian, Kravitz, Dichter & Johnson
2700 N. Central Avenue, Suite 1200
Phoenix, Arizona 85004
P: 602-792-1700
F: 602-792-1710

8985 S. Eastern Avenue, Suite
200 Las Vegas NV 89123
P: 702-362-6666
F: 702-992-1000

When an insured or a beneficiary submits a claim to an insurer, the insurer has a duty to respond and to do so in a certain manner. The Unfair Claims Settlement Practices Act (UCSPA), a model act adopted in over 40 states, provides industry guidelines for the insurer to follow when paying or denying claims. In general, the UCSPA requires the insurer to act promptly and fairly in response to a claim with a reasonable basis for any denials.

The following practices relating to the insurer's payment or denial of claims are prohibited by the UCSPA:

• refusing to pay claims without conducting a reasonable investigation
• failing to respond to claims within a reasonable time after receiving proof of loss
•  failing to make a prompt, fair, and equitable settlement of claims in which liability is reasonably clear
•  causing insureds to litigate to recover amounts due under an insurance policy by offering a low settlement
•  attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to advertising material
•  paying claims without setting forth the coverage under which the payments are being made
•  delaying the investigation or payment of claims by requiring insureds to submit duplicative information
•   failing to promptly explain a denial of a claim

If the insurer violates any of these provisions, an insured in certain states may have a private right of action against it. In some instances, the insured may even recover treble damages for the insurer's violation.

                         Copyright 2011 LexisNexis, a division of Reed Elsevier Inc.