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  • Beth Pariseau

What Are My Rights As a Policy Holder?

Suffering from a loss after a storm can be overwhelming and frustrating. Understanding the claim's process and knowing your rights as a policy holder can make the process of rebuilding feel less frustrating. An insurance policy is a contract between the insurer and the policyholder, which determines the claims which the insurer is legally required to pay. It also defines your rights and obligations as well as the rights and obligations of the insurance company. When a homeowner is faced with the task of speaking to the insurance company about their policy or a claim that has been filed, it often feels like the insurance company has the upper hand.

The laws tell insurance companies and their representatives what they must do, can do, and cannot do when an insurance claim is filed. While the laws in every state do vary slightly, there are 4 consistent important homeowners rights that all policy holders should be aware of.

  • Right to a full copy of your policy - As a consumer and policy holder, you have the right to obtain or be given a full copy of your policy free of charge. It is important to understand your home coverages and also any exclusions your insurance company has listed. Knowing your policy provides you with the basic knowledge needed to ensure your property has the best coverage for your situation as well as what to expect during the claims process.

  • Right to a coverage letter - For a homeowner going through the process of an insurance claim, understanding your insurance company’s coverage decision is important. If your insurance company approved your claim and made a payment, you have the right to know what that payment is and what was paid for. If your insurance company is denying coverage, you have the right to know under what part of the policy are you being denied coverage for.

  • Right to good faith claim's handling - An insurance company could potentially face a civil action against them and be exposed to significant financial consequences by acting in bad faith when settling claims with their insureds. Make copies, and maintain documentation of all written and verbal correspondence and consult with an attorney or file a complaint with the Department of Insurance if you feel like you’ve been wrongly denied or underpaid. Don't let your insurance company give you the runaround!

  • What constitutes as bad faith? Per the NC Department of Insurance: Unfair Claim Settlement Practices. – Committing or performing with such frequency as to indicate a general business practice of any of the following: Provided, however, that no violation of this subsection shall of itself create any cause of action in favor of any person other than the Commissioner:

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

b. Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;

c. Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;

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

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

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

g. Compelling [the] insured to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insured;

h. Attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled;

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

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

k. 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;

l. Delaying the investigation or payment of claims by requiring an insured claimant, or the physician, of [or] 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;

m. Failing to promptly settle claims where 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; and

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

  • Right to Prompt, Fair, and Equitable Settlement of Claims - A claim acknowledgment shall be sent to the claimant within 30 days after receiving written or electronic notice of the claim. Acknowledgment shall include one of the following: (1) A statement made to the insured or the claimant advising that the claim is being investigated. (2) Payment of the claim. (3) A bona fide written offer of settlement. (4) A written denial of the claim

Knowing your rights as a policy holder will ensure your insurance company is providing a fair and accurate claims settlement to ensure your property is brought back to it's pre-loss condition.


Interested in learning more about your rights - visit the NC Department of Insurance website here: https://www.ncdoi.gov/ and https://www.ncleg.gov/Laws/GeneralStatuteSections/Chapter58

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