Title 10, Chapter 5
(Approved by OAL and filed with Secretary of State 12/31/12. Per 2695.14: Compliance Date: 3/30/13)
Section 2695.1 Preamble
(a) Section 790.03(h) of the California Insurance Code enumerates sixteen claims settlement practices that, when either
knowingly committed on a single occasion or performed with such frequency as to indicate a general business practice, are considered to be unfair claims settlement practices and are, thus, prohibited by this section of the California Insurance Code. The Insurance Commissioner has promulgated these regulations in order to accomplish the following objectives:
(1) To delineate certain minimum standards for the settlement of claims which, when violated knowingly on a single occasion or performed with such frequency as to indicate a general business practice shall constitute an unfair claims settlement
practice within the meaning of Insurance Code Section 790.03(h);
(2) To promote the good faith, prompt, efficient, and equitable settlement of claims on a cost-effective base;
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(g) The California Insurance Code provides the commissioner with access to all records of an insurer and the power to examine the affairs of every person engaged in the business of insurance to determine if such person is engaged in any unfair or deceptive act or practice. California Insurance Code Section 790.03(h) requires all persons engaged in the business of insurance to effectuate prompt, fair, and equitable settlements of claims and to otherwise process claims in a fair and reasonable manner. The Department considers the use of reliable information to be an essential element of the fair and equitable
settlement of claims. The fact that information, data, or statistical methods used or relied upon by a licensee to process or establish the value of insurance claims is obtained through a third-party source shall not absolve the licensee of its legal responsibility to comply with these regulations or to effectuate prompt, fair and equitable settlements of claims. Failure of a licensee to provide the commissioner with requested information sufficient to examine the
licensee’s claims handling practices may justify a finding that the licensee was in non-compliance with these regulations or other applicable insurance code provisions. Any and all information received pursuant to the Department’s request shall be given confidential treatment, as provided in California Insurance Code section 735.5 and California Government Code Section 11180 et seq. When processing or establishing the value of a claim, a licensee shall not be
responsible for the accuracy of information provided by a governmental entity, unless the licensee has discovered or been notified of the inaccuracy and has continued to use the information.
NOTE: Authority cited: Sections 790.034, 790.10, 1871.1, 12340 – 12417, inclusive, 12921 and 12926 of the California Insurance Code and Sections 11342.2 and 11152 of the California Government Code. Reference: Sections 790.03, 790.04, 735.5, and 12740 of the California Insurance Code, and
Section 11180 et seq. of the California Government Code.
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(f) No insurer shall issue checks or drafts in partial settlement of a loss or claim that contains or is accompanied by language releasing the insurer, the
insured, or the principle on a surety bond from total liability unless the policy or bond limit has been paid, or there has been a compromise settlement agreed to by the claimant and the insurer as to coverage and amount
payable under the insurance policy or bond.
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(2) Subject to the provisions of subsection 2695.7(k), nothing contained in subsection 2695.7(c)(1) shall require an insurer to disclose any information that could reasonably be expected to alert a claimant to the fact that the claim is being investigated as a possible suspected fraudulent claim.
(d) Every insurer shall conduct and diligently pursue a thorough, fair, and objective investigation and shall not persist in
seeking information not reasonably required for or material to the resolution of a claim dispute.
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(f) If a partial loss is settled on the basis of a written estimate prepared by or for the insurer, the insurer shall supply the claimant with a copy of the estimate upon which the settlement is based. The estimate prepared by or for the insurer shall be of an amount that will allow for repairs to be made in accordance with accepted trade standards for good and workmanlike automotive repairs by an “auto body repair shop” as defined in section 9889.51 of the Business and Professions Code, and in accordance with the standards of automotive repair required of auto body repair shops as described in the Business and
Professions Code and associated regulations, including, but not limited to, Section 3365 of Title 16 of the California Code of Regulations. An insurer shall not prepare an estimate that deviates from the standards, costs, and/or guidelines provided by the third-party automobile collision repair estimating
software used by the insurer to prepare the estimate, if such deviation would result in an estimate that would not allow for repairs to be made in accordance with accepted trade standards for good and workmanlike automotive repairs by an auto body repair shop, as described in this subdivision.
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We advise all customers to seek legal counsel when dealing with automotive claims. The Dent Devils Inc & its staff do not give legal advice, but suggestions based on our own experience, and research.
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