Texas Life Agent Practice Exam

Which of the following actions is NOT considered unfair under the Unfair Claims Settlement Practices Act?

1. The denial of an unsubstantiated claim

2. Failure to communicate with claimants

3. Delaying payment on valid claims

4. Offering insufficient settlements

The correct answer is: The denial of an unsubstantiated claim

The denial of an unsubstantiated claim is considered a legitimate practice under the Unfair Claims Settlement Practices Act. This act aims to ensure that insurance companies handle claims fairly and promptly. When a claim is unsubstantiated, meaning that the policyholder has not provided adequate evidence or support for their claim, the insurer has the right to deny it. This is part of the responsibility of the insurer to avoid paying out on claims that do not meet the necessary criteria. In contrast, the other actions listed are generally viewed as unfair because they involve mishandling valid claims or failing to communicate effectively with claimants, which can lead to inconsiderate treatment of policyholders. For example, delaying payment on valid claims can cause financial strain on individuals who are reliant on the timely resolution of their insurance matters. Similarly, offering insufficient settlements does not reflect a fair assessment of the claim, which undermines the trust between the insurer and the insured. Lastly, failure to communicate can leave claimants in the dark regarding the status of their claims, leading to frustration and a sense of neglect.