20-461

20-461. Unfair claim settlement
practices

A. A person shall not commit or perform with such a frequency to indicate as a
general business practice any of the following:

1. Misrepresenting pertinent facts or insurance policy provisions relating to
coverages at issue.

2. Failing to acknowledge and act reasonably and promptly upon communications with
respect to claims arising under an insurance policy.

3. Failing to adopt and implement reasonable standards for the prompt investigation
of claims arising under an insurance policy.

4. Refusing to pay claims without conducting a reasonable investigation based upon
all available information.

5. Failing to affirm or deny coverage of claims within a reasonable time after
proof of loss statements have been completed.

6. Not attempting in good faith to effectuate prompt, fair and equitable
settlements of claims in which liability has become reasonably clear.

7. As a property or casualty insurer, failing to recognize a valid assignment of a
claim. The property or casualty insurer shall have the rights consistent with the
provisions of its insurance policy to receive notice of loss or claim and to all defenses
it may have to the loss or claim, but not otherwise to restrict an assignment of a loss
or claim after a loss has occurred.

8. Compelling insureds to institute litigation to recover amounts due under an
insurance policy by offering substantially less than the amounts ultimately recovered in
actions brought by the insureds.

9. Attempting to settle a claim for less than the amount to which a reasonable
person would have believed he was entitled by reference to written or printed advertising
material accompanying or made part of an application.

10. Attempting to settle claims on the basis of an application which was altered
without notice to, or knowledge or consent of, the insured.

11. Making claims payments to insureds or beneficiaries not accompanied by a
statement setting forth the coverage under which the payments are being made.

12. Making known to insureds or claimants a policy of appealing from arbitration
awards in favor of insureds or claimants for the purpose of compelling them to accept
settlements or compromises less than the amount awarded in arbitration.

13. Delaying the investigation or payment of claims by requiring an insured, a
claimant or the physician of either to submit a preliminary claim report and then
requiring the subsequent submission of formal proof of loss forms, both of which
submissions contain substantially the same information.

14. Failing to promptly settle claims if liability has become reasonably clear under
one portion of the insurance policy coverage in order to influence settlements under
other portions of the insurance policy coverage.

15. Failing to promptly provide a reasonable explanation of the basis in the
insurance policy relative to the facts or applicable law for denial of a claim or for the
offer of a compromise settlement.

16. Attempting to settle claims for the replacement of any nonmechanical sheet metal
or plastic part which generally constitutes the exterior of a motor vehicle, including
inner and outer panels, with an aftermarket crash part which is not made by or for the
manufacturer of an insured's motor vehicle unless the part meets the specifications of
section 44-1292 and unless the consumer is advised in a written notice attached to or
printed on a repair estimate which:

(a) Clearly identifies each part.

(b) Contains the following information in ten point or larger type:

This estimate has been prepared based on the use of replacement parts supplied
by a source other than the manufacturer of your motor vehicle. Warranties
applicable to these replacement parts are provided by the manufacturer or
distributor of these parts rather than the manufacturer of your vehicle.

17. As an insurer subject to section 20-826, 20-1342, 20-1402 or 20-1404, or as an
insurer of the same type as those subject to section 20-826, 20-1342, 20-1402 or 20-1404
that issues policies, contracts, plans, coverages or evidences of coverage for delivery
in this state, failing to pay charges for reasonable and necessary services provided by
any physician licensed pursuant to title 32, chapter 8, 13 or 17, if the services are
within the lawful scope of practice of the physician and the insurance coverage includes
diagnosis and treatment of the condition or complaint, regardless of the nomenclature
used to describe the condition, complaint or service.

18. Failing to comply with chapter 15 of this title.

19. Denying liability for a claim under a motor vehicle liability policy in effect
at the time of an accident without having substantial facts based on reasonable
investigation to justify the denial for damages or injuries that are a result of the
accident and that were caused by the insured if the denial is based solely on a medical
condition that could affect the insured's driving ability.

B. Nothing in subsection A, paragraph 17 of this section shall be construed to
prohibit the application of deductibles, coinsurance, preferred provider organization
requirements, cost containment measures or quality assurance measures if they are equally
applied to all types of physicians referred to in this section, and if any limitation or
condition placed upon payment to or upon services, diagnosis or treatment by any
physician covered by this section is equally applied to all physicians referred to in
subsection A, paragraph 16 of this section, without discrimination to the usual and
customary procedures of any type of physician. A determination under this section of
discrimination to the usual and customary procedures of any type of physician shall not
be based on whether an insurer applies medical necessity review to a particular type of
service or treatment.

C. In prescribing rules to implement this section, the director shall follow, to
the extent appropriate, the national association of insurance commissioners unfair claims
settlement practices model regulation.

D. Nothing contained in this section is intended to provide any private right or
cause of action to or on behalf of any insured or uninsured resident or nonresident of
this state. It is, however, the specific intent of this section to provide solely an
administrative remedy to the director for any violation of this section or rule related
to this section.

E. The director shall deposit, pursuant to sections 35-146 and 35-147, all civil
penalties collected pursuant to this article in the state general fund.