Claims Handling Practices - Virginia
September 3, 2019
Claims Handeling Standards
Virginia prohibits the following unfair claim settlement practices (Va. Code Ann. § 38.2-510(A)(1)-(17)):
- Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
- Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;
- Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
- Refusing arbitrarily and unreasonably to pay claims;
- Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;
- Not attempting in good faith to make prompt, fair and equitable settlements of claims in which liability has become reasonably clear;
- 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 such insureds;
- Attempting to settle claims for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application;
- Attempting to settle claims on the basis of an application that was altered without notice to, or knowledge or consent of, the insured;
- Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made;
- 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;
- 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, when both contain substantially the same information;
- 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;
- 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;
- Failing to comply with § 38.2-3407.15, or to perform any provider contract provision required by that section;
- Payment to an insurer or its representative by a repair facility, or acceptance by an insurer or its representative from a repair facility, directly or indirectly, of any kickback, rebate, commission, thing of value, or other consideration in connection with such person's appraisal service; or
- Making appraisals of the cost of repairing a motor vehicle that has been damaged as a result of a covered loss unless such appraisal is based upon a personal inspection by a representative of the repair facility or a representative of the insurer who is making the appraisal. Notwithstanding the requirement that an appraisal be based upon a personal inspection, the repair facility or the insurer making the appraisal may prepare an initial, which may be the final, repair appraisal on a motor vehicle that has been damaged as a result of a covered loss either from the representative's personal inspection of the motor vehicle or from photographs, videos, or electronically transmitted digital imagery of the motor vehicle; however, no insurer may require an owner of a motor vehicle to submit photographs, videos, or electronically transmitted digital imagery as a condition of an appraisal. Supplemental repair estimates that become necessary after the repair work has been initiated due to discovery of additional damage to the motor vehicle may also be made from photographs, videos, or electronically transmitted digital imagery of the motor vehicle, provided that in the case of disputed repairs a personal inspection is required.
Hurricane Claims Standards
The Virginia State Corporation Commission – Bureau of Insurance issues disaster readiness materials, including a commercial property disaster guide, on its website: https://www.scc.virginia.gov/boi/disaster.aspx
Duty of Good Faith
The Virginia Supreme Court has not recognized a cause of action for breach of the duty of good faith in the first-party insurance context. See Coker v. State Farm Fire & Cas. Co., 45 Va. Cir. 510, 516 (Cir. Ct. 1998).
Virginia law sets standards of conduct for public insurance adjusters, codified at Va. Code Ann. § 38.2-1845.12.
Communication, Investigation, and Payment Deadlines
14 Va. Admin. Code § 5-400-50; -60
An insurer, upon receiving notification of a claim shall, within 15 calendar days, acknowledge the receipt of such notice to the claimant unless payment is made within such period of time, except that if a provider submits a claim, acknowledgment of the claim is satisfied if payment or denial of the claim is made to the provider within 21 calendar days. If an acknowledgment is made by means other than writing, an appropriate notation of such acknowledgment shall be made in the claim file of the insurer and dated. Notification given by a claimant to an agent of an insurer shall be notification to the insurer.
Upon receipt of any inquiry from the commission respecting a claim, an insurer shall furnish a complete response to the inquiry within 15 calendar days of receipt.
An appropriate reply shall be made within 15 calendar days on all other pertinent communications from a claimant that reasonably suggest that a response is expected.
Upon receiving notification of a claim, an insurer shall promptly provide necessary claim forms, instructions, and reasonable assistance in order for the claimant to comply with the applicable policy conditions and the insurer's reasonable requirements. Compliance with this subsection within 15 calendar days of notification of a claim shall constitute compliance with subsection A of this section.
Within 15 calendar days after receipt by the insurer of any required properly executed proof of loss, a first party claimant shall be advised of the acceptance or denial of the claim by the insurer. If the insurer needs more time to determine whether a claim should be accepted or denied, it shall notify the first party claimant within 15 calendar days after receipt of the proof of loss giving the reasons more time is needed.
If an investigation of a first party claim has not been completed, an insurer shall, within 45 calendar days from the date of the notification of a first party claim and every 45 calendar days thereafter, send to the first party claimant a written notice setting forth the reasons additional time is needed for investigation.
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