DEFINITION of 'Unfair Claims Practice'

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.

BREAKING DOWN 'Unfair Claims Practice'

The National Association of Insurance Commisioners (NAIC) has created legislation that states that claims be handled fairly and that there is clear communication between the insurer and the insured. Because of this legislation, many states have implemented unfair claims practice laws.

RELATED TERMS
  1. Adjuster

    An insurance claims agent. A claims adjuster is charged with ...
  2. Insurance Claim

    A formal request to an insurance company asking for a payment ...
  3. Unfair Trade Practice

    Using various deceptive, fraudulent or unethical methods to obtain ...
  4. Insurance Defense

    An attorney who specializes in cases relating to insurance.
  5. Claims Adjuster

    Someone who investigates insurance claims to determine the extent ...
  6. S&P Claims Paying Ability Rating

    The S&P claims paying ability rating is a letter grade that signifies ...
Related Articles
  1. Insurance

    What To Do When Your Insurance Company Won't Pay

    Struggling to get a claim honoured? Find out what you can do.
  2. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
  3. Insurance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  4. Insurance

    The History Of Insurance In America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  5. Trading

    Trading With The Jobless Claims Report

    Introduction to the jobless claims report. This article looks at what jobless claims tell us about the economy's health and how to interpret the data contained in the release.
  6. Insurance

    Exploring Advanced Insurance Contract Fundamentals

    Understanding your contract can help you protect our family's financial security.
  7. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
RELATED FAQS
  1. How are open market operations and monetary policy related?

    Understand the meaning of an aggregate limit in an insurance policy as well as which types of insurance companies are most ... Read Answer >>
  2. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  3. How do I choose which insurance company to use?

    Picking an insurance company to use is not an easy task, considering the financial crisis of 2008 and 2009. Several financial ... Read Answer >>
  4. What is the main business model for insurance companies?

    Read about the most important components of an insurance company business model, such as risk pricing, float investing and ... Read Answer >>
  5. What are examples of the largest companies in the insurance sector?

    Read about some of the largest and most influential companies in the insurance sector, a list that includes Berkshire Hathaway ... Read Answer >>
  6. What is the usual profit margin for a company in the insurance sector?

    Learn what the average profit margin is within the insurance industry, and what factors can affect the profitability of an ... Read Answer >>
Hot Definitions
  1. Ponzi Scheme

    A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns ...
  2. Dow Jones Industrial Average - DJIA

    The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange ...
  3. Revolving Credit

    A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is ...
  4. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
  5. Contango

    A situation where the futures price of a commodity is above the expected future spot price. Contango refers to a situation ...
  6. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
Trading Center