Unfair and Deceptive Practice Claims

visible arm of man filling out insurance form in front of a car with broken glassIn Massachusetts, insurance carriers have certain obligations to victims of accidents, and can be penalized for certain actions as a result of successful unfair and deceptive practice claims. This penalty can include the doubling or tripling of damages, benefiting the accident victim who files an unfair and deceptive practice claim. It can also include an additional payment of attorney’s fees and costs to the accident victim’s lawyer.

Depending upon the actions of an insurance company, a separate action can be brought in addition to a personal injury claim, meaning that an accident victim can continue to seek damages against a responsible party and also maintain a separate action against the responsible party’s insurance carrier. These types of unfair and deceptive practice claims can relate to a bodily injury or property damage claim, a loss of consortium claim, or any other type of claim relating to an accident.

Important statutes for making an unfair and deceptive practice claim include Massachusetts General Laws Chapter 93A, which authorizes these types of claims against insurance carriers, and Massachusetts General Laws Chapter 176D, which expressly defines what acts or omissions are to be considered unfair and deceptive acts or practices by an insurance carrier.

Some of these prohibited acts or practices by an insurance company include:

  • Misrepresenting pertinent facts or insurance policy provisions
  • Failing to acknowledge and act reasonably promptly to claims communications
  • Failing to adopt and implement reasonable standards for the prompt investigation of claims
  • Refusing to pay claims without conducting a reasonable investigation based upon all available information
  • Failing to affirm or deny coverage of claims within a reasonable period of time after proof of loss statements have been completed
  • Failing to effectuate 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
  • Failing to settle claims promptly, where liability has become reasonably clear, under one portion of the insurance policy in order influence settlements under other portions of the insurance policy coverage;
  • Failing to provide promptly 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 compromised settlement.

If these acts or practices occur, then an attorney can pursue an unfair and deceptive practice claim against an insurance carrier. The attorney sends a statutory demand letter that specifically describes the alleged wrongdoing, includes all facts supporting the wrongdoing, and makes a demand — usually monetary in nature — against the insurance carrier. Once this demand is made, the insurance carrier has 30 days to respond.  Depending upon the response by the insurance carrier, this can sometimes lead to the settlement of a case, or can give rise to this additional form of litigation.