what is unfair claims practice 
unfair claims practice is the improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim by engaging in unfair claims practices an insurer tries to reduce its costs however this is illegal in many jurisdictions understanding unfair claims practicethe national association of insurance commissioners naic has created a model of unfair claims practice legislation that mandates claims be handled fairly and that there be clear communication between the insurer and the insured states not the federal government regulate insurance many jurisdictions have implemented unfair claims practices laws modeled after the naic s model act also most states have enacted a version of this model law called the unfair claims settlement practices act it protects insurance buyers from unjust behavior by insurers in the claims settlement process specifics of the law vary from state to state unfair claims settlement practices acts ucspa are not federal law instead they are enforced by individual state insurance departments example of unfair claims practiceconsider a small business owner that insures his company s building and business personal property under a commercial property policy unfortunately a fire broke out in the building causing 100 000 in property damage the insurance company delays payment rendering the business owner unable to repair any of the damage the insurance company continues using delay tactics to avoid making a payment for example the claims representative keeps forgetting to send the claim forms also the adjuster says he needs another proof of loss but the small business owner has already submitted proof of loss twice these are the types of situations that unfair claims practice laws are designed to prevent other examples of unfair claims practice