By Dennis J. Wall
Notice of a claim is, of course, the reason for opening an insurance claim file. In many jurisdictions, however, the closely scrutinized handling of a hurricane or another catastrophe claim requires special awareness. Many states, such as Michigan, carry statutes requiring that claims be paid in whole or in part within a reasonable amount of time. In other states, such as Wisconsin, similar statutes stipulate that any partial amount of an insurance claim is considered overdue if not paid within a time certain — 30 days, under the Wisconsin statute — after such written notice is furnished to the insurer.
The Wisconsin Supreme Court, parenthetically, has ruled that this statutory requirement is not the same as good-faith or bad-faith claim handling. Instead, the statutory penalty applies regardless of the manner in which the particular insurance claim is being handled. Thus, a claim professional must determine if there is sufficient proof to warrant paying part of a claim that has been filed under an insurance policy, even if the particular proof does not establish coverage for the
entire
claim.
Affirm or Deny
In most jurisdictions, the failure to affirm or deny coverage of a claim within a reasonable amount of time after a proof-of-loss statement has been completed is considered an unfair claim settlement practice. Such a practice can give rise to a lawsuit against the insurance company for perceived bad faith and unfair dealings.