State RegulationsNC specificDifficulty 1/5
Which of the following is an unfair claims settlement practice under the North Carolina Unfair Trade Practices Article?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
The Unfair Trade Practices Article (G.S. 58-63-15) enumerates unfair claims settlement practices, including failing to affirm or deny coverage of claims within a reasonable time after proof-of-loss requirements are completed and failing to act promptly on communications relating to claims. The other choices describe lawful, proper claims handling: a written denial with specific reasons, a reasonable proof-of-loss requirement, and prompt settlement are exactly the conduct the statute expects of insurers.
Why the other options are wrong
- A: A written denial stating specific reasons is proper claims practice, not an unfair practice.
- B: Conditioning payment on a signed proof of loss is permitted; the form and time limits for proof come from the policy's standard provisions (G.S. 58-51-15).
- D: Prompt settlement after the insurer receives the needed documentation is the conduct the statute encourages, so it cannot be an unfair claims settlement practice.
Memory hook
Unfair claims = dragging feet: no timely affirm-or-deny.