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Welcome to the Center for Health Insurance Claims Advocacy a non-profit corporation We are Experts in Unfair Claims Settlement Practices Violations
IN THE NEWS "a excellent guide to provider and patients rights"
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Arizona Unfair Health Insurance Claims Information California Unfair Health Insurance Claims Information How to File a Claim for Your Benefits under ERISA A Consumer's Guide to Health Care Appeals
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Arizona Administrative Code TITLE 20. COMMERCE, BANKING, AND INSURANCE CHAPTER 6.
DEPARTMENT OF INSURANCE ARTICLE 8. PROHIBITED PRACTICES, PENALTIES R20-6-801. Unfair Claims Settlement Practices A. Applicability. This rule applies to all persons and
to all insurance policies, insurance contracts and subscription contracts except
policies of Worker's Compensation and title insurance. This rule is not
exclusive, and other acts not herein specified, may also be deemed to be a
violation of A.R.S. § 20-461, The Unfair Claims Settlement Practices Act. B. Definitions 1. "Agent" means any individual,
corporation, association, partnership or other legal entity authorized to
represent an insurer with respect to a claim. 2. "Claimant" means either a first party
claimant, a third party claimant, or both and includes such claimant's
designated legal representative and includes a member of the claimant's
immediate family designated by the claimant. 3. "Director" means the Director of
Insurance of the State of Arizona. 4.
"First party claimant" means an individual, corporation, association,
partnership or other legal entity asserting a right to payment under an
insurance policy or insurance contract arising out of the occurrence of the
contingency of loss covered by such policy or contract. 5. "Insurance policy or insurance contract"
has the meaning of A.R.S. § 20-103. 6. "Insurer" has the meaning of A.R.S. §
20-106(C). 7. "Investigation" means all activities of
an insurer directly or indirectly related to the determination of liabilities
under coverages afforded by an insurance policy or insurance contract. 8. "Notification of claim" means any
notification, whether in writing or other means, acceptable under the terms of
any insurance policy or insurance contract, to an insurer or its agent, by a
claimant, which reasonably apprises the insurer of the facts pertinent to a
claim. 9. "Person" has the meaning of A.R.S. §
20-105. 10. "Third party claimant" means any
individual, corporation, association, partnership or other legal entity
asserting a claim against any individual, corporation, association, partnership
or other legal entity insured under an insurance policy or insurance contract of
an insurer. 11. "Worker's compensation" includes, but is
not limited to, Longshoremen's and Harbor Worker's Compensation. C. File and record documentation. The insurer's claim
files shall be subject to examination by the Director or by his duly appointed
designees. Such files shall contain all notes and work papers pertaining to the
claim in such detail that pertinent events and the dates of such events can be
reconstructed. D. Misrepresentation of policy provisions 1. No insurer shall fail to fully disclose to first
party claimants all pertinent benefits, coverages or other provisions of an
insurance policy or insurance contract under which a claim is presented. 2. No agent shall conceal from first party claimants
benefits, coverages or other provisions of any insurance policy or insurance
contract when such benefits, coverages or other provisions are pertinent to a
claim. 3. No insurer shall deny a claim on the basis that the
claimant has failed to exhibit the damaged property to the insurer, unless the
insurer has requested the claimant to exhibit the property and the claimant has
refused without a sound basis therefor. 4. No insurer shall, except where there is a time
limit specified in the policy, make statements, written or otherwise, requiring
a claimant to give written notice of loss or proof of loss within a specified
time limit and which seek to relieve the company of its obligations if such a
time limit is not complied with unless the failure to comply with such time
limit prejudices the insurer's rights. 5. No insurer shall request a first party claimant to
sign a release that extends beyond the subject matter that gave rise to the
claim payment. 6. No insurer shall issue checks or drafts in partial
settlement of a loss or claim under a specific coverage which contain language
that releases the insurer or its insured from its total liability. E.
Failure to acknowledge pertinent communications 1.
Every insurer, upon receiving notification of a claim shall, within 10 working
days, acknowledge the receipt of such notice unless payment is made within such
period of time. If an acknowledgment is made by means other than writing, an
appropriate notation of such acknowledgment shall be made in the claim file of
the insurer and dated. Notification given to an agent of an insurer shall be
notification to the insurer. 2. Every insurer, upon receipt of any inquiry from the
Department of Insurance respecting a claim shall, within fifteen working days of
receipt of such inquiry, furnish the Department with an adequate response to the
inquiry. 3.
An appropriate reply shall be made within 10 working days on all other pertinent
communications from a claimant which reasonably suggest that a response is
expected. 4.
Every insurer, upon receiving notification of claim, shall promptly provide
necessary claim forms, instructions, and reasonable assistance so that first
party claimants can comply with the policy conditions and the insurer's
reasonable requirements. Compliance with this paragraph within 10 working days
of notification of a claim shall constitute compliance with paragraph (1) of
this subsection. F.
Standards for prompt investigation of claims. Every insurer shall complete
investigation of a claim within 30 days after notification of claim, unless such
investigation cannot reasonably be completed within such time. G. Standards for prompt, fair and equitable
settlements applicable to all insurers 1. Notice of acceptance of denial of claim. a. Within fifteen working days after receipt by the
insurer of properly executed proofs of loss, the first party claimant shall be
advised of the acceptance or denial of the claim by the insurer. No insurer
shall deny a claim on the grounds of a specific policy provision, condition, or
exclusion unless reference to such provision, condition or exclusion is included
in the denial. The denial must be given to the claimant in writing and the claim
file of the insurer shall contain a copy of the denial. b. If the insurer needs more time to determine whether
a first party claim should be accepted or denied, it shall also notify the first
party claimant within fifteen working days after receipt of the proofs of loss,
giving the reasons more time is needed. If the investigation remains incomplete,
the insurer shall, 45 days from the date of the initial notification and every
45 days thereafter, send to such claimant a letter setting forth the reasons
additional time is needed for investigation. c. Where there is a reasonable basis supported by
specific information available for review by the Director for suspecting that
the first party claimant has fraudulently caused or contributed to the loss by
arson, the insurer is relieved from the requirements of subparagraphs (a) and
(b) above. Provided, however, that the claimant shall be advised of the
acceptance or denial of the claim by the insurer within a reasonable time for
full investigation after receipt by the insurer of a properly executed proof of
loss. 2. If a claim is denied for reasons other than those
described in subparagraph (a) above, and is made by any other means than
writing, an appropriate notation shall be made in the claim file of the insurer. 3. Insurers shall not fail to settle first party
claims on the basis that responsibility for payment should be assumed by others,
except as may otherwise be provided by policy provisions. 4. Insurers shall not continue negotiations for
settlement of a claim directly with a claimant who is neither an attorney nor
represented by an attorney until the claimant's rights may be affected by a
statute of limitations or a policy or contract time limit, without giving the
claimant written notice that the time limit may be expiring and may affect the
claimant's right. Such notice shall be given to first party claimants 30 days
and to third party claimants 60 days before the date on which such time limit
may expire. 5. No insurer shall make statements which indicate
that the rights of a third party claimant may be impaired if a form or release
is not completed within a given period of time unless the statement is given for
the purpose of notifying the third party claimant of the provision of a statute
of limitations. H. Standards for prompt, fair and equitable
settlements applicable to automobile insurance 1. When the insurance policy provides for the
adjustment and settlement of first party automobile total losses on the basis of
actual cash value or replacement with another of like kind and quality, one of
the following methods must apply: a. The insurer may elect to offer a replacement
automobile which is a specific comparable automobile available to the insured,
with all applicable taxes, license fees and other fees incident to transfer of
evidence of ownership of the automobile paid, at no cost other than any
deductible provided in the policy. The offer and any rejection thereof must be
documented in the claim file. b. The insurer may elect a cash settlement based upon
the actual cost, less any deductible provided in the policy, to purchase a
comparable automobile including all applicable taxes, license fees and other
fees incident to transfer of evidence of ownership of a comparable automobile.
Such cost may be determined by: i. The cost of a comparable automobile in the local
market area when a comparable automobile is available in the local market area. ii. One of two or more quotations obtained by the
insurer from two or more qualified dealers located within the local market area
when a comparable automobile is not available in the local market area. c. When a first party automobile total loss is settled
on a basis which deviates from the methods described in subparagraphs (a) and
(b) above, the deviation must be supported by documentation giving particulars
of the automobile condition. Any deductions from such cost, including deduction
for salvage, must be measurable, discernible, itemized and specified as to
dollar amount and shall be appropriate in amount. The basis for such settlement
shall be fully explained to the first party claimant. 2. Where liability and damages are reasonably clear,
insurers shall not recommend that third party claimants make claim under their
own policies solely to avoid paying claims under such insurer's policy or
insurance contract. 3. Insurers shall not require a claimant to travel
unreasonably either to inspect a replacement automobile, to obtain a repair
estimate or to have the automobile repaired at a specific repair shop. 4. Insurers shall, upon the claimant's request,
include the first party claimant's deductible, if any, in subrogation demands.
Subrogation recoveries shall be shared on a proportionate basis with the first
party claimant, unless the deductible amount has been otherwise recovered. No
deduction for expenses can be made from the deductible recovery unless an
outside attorney is retained to collect such recovery. The deduction may then be
for only a pro rata share of the allocated loss adjustment expense. 5. If an insurer prepares an estimate of the cost of
automobile repairs, such estimate shall be in an amount for which it may be
reasonably expected the damage can be satisfactorily repaired. The insurer shall
give a copy of the estimate to the claimant and may furnish to the claimant the
names of one or more conveniently located repair shops. 6. When the amount claimed is reduced because of
betterment or depreciation all information for such reduction shall be contained
in the claim file. Such deductions shall be itemized and specified as to dollar
amount and shall be appropriate for the amount of deductions. 7. When the insurer elects to repair and designates a
specific repair shop for automobile repairs, the insurer shall cause the damaged
automobile to be restored to its condition prior to the loss at no additional
cost to the claimant other than as stated in the policy and within a reasonable
period of time. 8. The insurer shall not use as a basis for cash
settlement with a first party claimant an amount which is less than the amount
which the insurer would pay if the repairs were made, other than in total loss
situations, unless such amount is agreed to by the insured. I. Severability. If any provision of this rule or the
application thereof to any person or circumstances is held invalid, the
remainder of the rule and the application of such provision to other persons and
circumstances shall not be affected. J. Effective date. This rule shall become effective 90
days from the date of filing with the Secretary of State. Historical
Note
Adopted
effective January 12, 1982 (Supp. 81-5). R20-6-801 recodified from R4-14-801
(Supp. 95-1). R20-6-802. Emergency Expired Historical
Note
Emergency
rule adopted effective May 31, 1991, pursuant to A.R.S. § 41-1026, valid for
only 90 days (Supp. 91-2). Emergency expired. Emergency rule readopted without
change effective September 5, 1991, pursuant to A.R.S. § 41-1026, valid for
only 90 days (Supp. 91-3). Emergency expired. R20-6-802 recodified from
R4-14-802 (Supp. 95-1). |
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