Glossary
Unfair claims settlement practices act
State laws, modeled on an NAIC template, that list claim-handling conduct insurers may not engage in and let the insurance commissioner discipline violators.
Also called: UCSPA, unfair claims practices act, unfair claims settlement practices law
Nearly every state has a law, drawn in whole or in part from the NAIC's Unfair Claims Settlement Practices Act (adopted in 1990) and its companion regulations, that bars unfair claim handling. Typical prohibited acts include misrepresenting policy provisions, failing to acknowledge or answer communications promptly, refusing to pay without a reasonable investigation, not trying to settle in good faith once liability is reasonably clear, and offering substantially less than what is owed to push a policyholder into suing.
The NAIC's property and casualty regulation adds timelines. Its model text calls for acknowledging a claim within 15 days, though states change the count, and some use working days instead of calendar days.
Enforcement usually sits with the insurance commissioner, who can investigate, issue cease-and-desist orders and fine violators. Under the NAIC model, a single mistake generally does not qualify unless it is flagrant; the law looks for conduct that amounts to a general business practice. The model also states that it creates no private right to sue, and many states follow that approach, though some allow private actions. For a policyholder, the practical tool is a complaint to the department of insurance, which requires the insurer to respond. The guides on unfair claims settlement practices laws and filing a complaint with your state insurance department show how.
Last reviewed October 10, 2026