State RegulationsNY specificDifficulty 1/5
Which of the following is an unfair claim settlement practice under New York Insurance Law §2601?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under N.Y. Ins. Law §2601 and Reg 64 (11 NYCRR Part 216.3 through 216.6), it is an unfair claim settlement practice for an insurer to fail to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear. A pattern of such conduct is enforceable by the Superintendent of Financial Services, who may impose penalties and order remedies for aggrieved claimants.
Why the other options are wrong
- A) Promptly paying a covered claim is exactly what the statute encourages, so this conduct is proper rather than prohibited.
- B) Denying a claim that the policy genuinely does not cover is a legitimate application of the contract's terms, not an unfair practice.
- D) Requesting information reasonably needed to process or investigate a claim is permitted; only unreasonable or delaying demands would be problematic.
Memory hook
Liability clear + no good-faith settlement effort = unfair claims practice.