Life License Qualification Program (LLQP) Practice Exam

Which of the following is NOT an unfair claim settlement practice?

1. Failing to acknowledge and act promptly with respect to an insurance claim

2. Compelling an insured to initiate a lawsuit by offering less on an insurance claim

3. Failing to accept or deny a claim within reasonable time after proof of loss is submitted

4. Needing written documentation of claim details

The correct answer is: Needing written documentation of claim details

The correct choice highlights that needing written documentation of claim details is not an unfair claim settlement practice. In fact, requiring documented proof of a claim is a standard and necessary procedure in the insurance industry. It ensures that the insurer has the necessary information to assess the validity of a claim and determines the appropriate response. Documentation helps to safeguard against fraudulent claims and provides a clear record of the circumstances surrounding the claim, which can be essential for fair claim processing. In contrast, the other options describe practices that may unfairly disadvantage claimants. Failing to acknowledge claims or delaying action can lead to unnecessary stress for the insured and prolongs the claims process, which is considered unfair. Similarly, compelling an insured to initiate a lawsuit by offering insufficient amounts for claims can place undue pressure on the claimant, creating an imbalanced power dynamic in the claim settlement process. Lastly, failing to respond to claims in a timely manner after proof of loss has been submitted further exacerbates issues for clients who expect prompt resolutions. Thus, the practices outlined in options A, B, and C contribute to unfair treatment, while requiring written documentation is a legitimate part of the claims process.