Virginia State Life, Health and Annuities Practice Exam

An unfair claims settlement practice involves actions that can harm a policyholder's rights or interests during the claims process. Not investigating claims properly is considered one such practice because it undermines the duty of the insurer to assess claims fairly and comprehensively. When an insurer fails to conduct a proper investigation, it can lead to delays in payment, wrongful denial of claims, or inadequate compensation for the insured. Insurers are obligated to fully evaluate claims based on available evidence, and neglecting this duty can result in unjust treatment for those relying on their policy for financial protection.

In contrast, paying claims immediately is generally seen as a positive practice, suggesting efficiency and goodwill on the part of the insurer. Settling for less than necessary could lead to dissatisfaction, but it may not constitute an unfair practice unless it involves coercion or misrepresentation. Delaying payment without reason can harm the claimant, but it does not highlight the core issue of not fulfilling the duty to investigate and validate claims appropriately.