by Charles Bryant
The quick answer to this question is “yes, sure they do.” A more realistic answer is “yes, but who cares?”
Based on what is going on in New Jersey, the insurance companies settling claims don’t seem to care because they certainly aren’t following the rules. Oh, wait, I forgot for a minute…insurance companies are not treated like everyone else. They don’t have to follow the rules like everyone else does. Now, I am sure that statement is going to strike some interest, so please allow me to explain.
Insurance claim settlements are governed by what is commonly referred to as the “Unfair Claim Settlement Practices Act.”
Quoting directly from the act, the purpose of the act – or rules found in the act – is to ”prohibit insurers from engaging in unfair claims settlement practices” and to “promote the fair and equitable treatment of claimants by defining certain minimum standards for the settlement of claims.” Well, that certainly appears to be a standard that would require insurers to follow the rules that govern the settlement of claims.
Oh wait. Again, I forgot to mention that the rule referenced above goes further to say, “which, if violated with such frequency as to indicate a general business practice, would constitute unfair claims settlement practices in the business of insurance.” Now, wait a minute, as I mentioned above, the rules are in place to ”prohibit insurers from engaging in unfair claims settlement practices” and to “promote the fair and equitable treatment of claimants by defining certain minimum standards for the settlement of claims.”
Since these rules are put in place to prohibit insurers from engaging in unfair claims settlement practices and to “promote the fair and equitable treatment of claimants by defining certain minimum standards for the settlement of claims,” why would an insurer be allowed to violate the rules enough to indicate, or establish that they have violated the rules enough to create a general business practice before such a violation would be considered or constitute unfair claim settlement practices?
That simply doesn’t even make sense! That’s like saying it’s illegal to run a red light, but then saying a police officer can’t give the person running the red light a ticket until he catches the person running the red light enough times to create a general practice of running the red light. Based on the rules referenced above, it’s no wonder that insurance companies are doing whatever they want and acting as if there are no rules that govern how they handle the settlement of claims.
Now don’t get me wrong: When I mention that insurance companies are not handling the settlement of claims properly, I do not mean to infer that this is something that started happening recently. This is something that has been happening for as long as I can remember!
The problem is that things have changed. In the past, if an insurer failed to follow the rules that govern fair claim settlement practices, the consumer would likely have to just accept that it’s ok for the insurer to violate the rules because he or she has no way to show that the insurer is not following the rules. Maybe the insured would wind up with less than what it takes to repair his or her vehicle properly, and it would negatively affect the retail value of the vehicle.
Now, with modern vehicles equipped with so much artificially intelligent equipment like automatic braking, lane change sensors and thensome that MUST be repaired properly or replaced when required and MUST be recalibrated after the repairs are completed, the rules MUST be strictly enforced. There should be no such thing as having to show that an insurer has violated the regulations enough to create a general business practice because now when insurers fail to pay to repair these modern vehicles safely and properly, people are going to die! Period!
I am looking for feedback on the information provided in this article. If you are a shop owner, or a consumer that has experienced an insurer’s blatant violation of the rules that are supposed to govern fair claim settlement practices, please reach out to me so we can document it. These rules that govern how insurers handle auto insurance claims have got to change, and now, based on the explanation referenced above, it’s not a matter of just what is right or wrong; it’s a matter of life or death. We will be watching!
Want more? Check out the May 2023 issue of New Jersey Automotive!