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The Commissioner reserves the right to examine every licensee's claim files, including all documents, notes, and work papers (including copies of all correspondence). Files must be detailed enough that events, and the dates of events, can be reconstructed, and the licensee's actions can be determined.
Insurers must maintain claim records that are accessible, legible, and retrievable; record the dates the licensee received, processed, and transmitted or mailed relevant documents in the file; and maintain hard copy files (or, if not hard copies, files in a format that is accessible, legible, and capable of being duplicated to hard copy).
If a licensee cannot construct complete records due to catastrophic losses or other unusual circumstances, the licensee must document the inability or difficulty for the Commissioner and submit a plan for file and record documentation to be used while those circumstances persist.
Upon receiving any inquiry from the Department of Insurance concerning a claim, the licensee must respond within 21 calendar days, addressing all issues raised in the inquiry. Upon receiving any communication from a claimant that reasonably suggests a response is expected, every licensee must furnish a complete response within 15 days.
A designation of claimant must be in writing, signed and dated by the claimant, and must indicate that the designated person is authorized to handle the claim. Designations remain valid from execution until the claim is settled or the designation is revoked in writing, signed and dated by the claimant.
Upon receiving notice of claim, every licensee must immediately transmit the notice to the insurer; the licensee's duty is satisfied by complying with pertinent written instructions received from the insurer. Upon receiving notice of claim (unless it is a notice of legal action), every insurer must, within 15 days: acknowledge receipt of the notice to the claimant unless payment is made within that period (if the acknowledgment is not in writing, a notation must be made and dated in the insurer's claim file; failure of an agent to promptly transmit notice of claim is imputed to the insurer); provide the claimant necessary forms, instructions, and reasonable assistance, including specifying what information is needed for proof of claim; and begin any necessary investigation of the claim.
Insurers cannot discriminate in claims settlement practices based on a claimant's age, race, gender, income, religion, language, sexual orientation, ancestry, national origin, or physical disability, or the territory of the property or person insured.
Once a claim is received, insurers must accept or deny it within 40 calendar days, with amounts accepted or denied clearly documented unless the claim is denied in its entirety. (This time frame does not apply to disability insurance or disability income insurance claims, or to automobile repair bills arising from automobile collision and comprehensive insurance policies.)
If an insurer rejects a first-party claim, the rejection must be in writing and state the basis for the rejection. Insurers are protected from disclosing information that could alert a claimant that a claim is being investigated as suspected fraud.
Written notification must include a statement that the claimant may have the claim reviewed by the California Department of Insurance if they suspect it was wrongfully denied or rejected, along with the address and telephone number of the Department unit that reviews claims practices.
If an insurer needs more time to determine acceptance or denial, it must, within the 40-day acceptance period, notify the claimant in writing of the need for more time, any additional information required, and any continuing reasons for the delay. Thereafter, written notice must be provided every 30 calendar days until a determination is made or notice of legal action is served.
An insurer cannot attempt to settle a claim by making a settlement offer that is unreasonably low. Upon acceptance of the claim, insurers are required to provide payment within 30 days.