California Property & Casualty Broker-AgentCalifornia LawHard
A California Property & Casualty Broker-Agent is assisting a client with a claim for vandalism. The insurer, after receiving all necessary proofs of loss, indicates that it will pay the claim. According to California's Unfair Practices Act, how soon must the insurer pay the claim after reaching an agreement with the insured?
- AWithin 10 business days
- BImmediately upon agreement
- CWithin 5 business days
- DWithin 15 calendar days
Show answer & explanationAnswer & explanation
Correct answer: A. Within 10 business days
California Insurance Code (CIC 790.03(h)(5) and related regulations) stipulates that once an insurer has affirmed coverage and reached an agreement with the insured on the amount of the claim, payment must be made within 10 business days. This ensures prompt settlement of agreed-upon claims.
Why the other options are wrong
- B. While desirable, 'immediately' is not the legal standard; a specific timeframe is provided.
- C. This timeframe is too short; 10 business days is the correct legal requirement.
- D. This timeframe is incorrect; it uses calendar days and is longer than the statutory requirement.
Claim Payment After Agreement
In California, after an insurer affirms coverage and reaches an agreement with the insured on a claim amount, payment must be made within 10 business days.
- Applies once liability and amount are settled.
- Part of the Unfair Practices Act to ensure prompt payment.
- Distinguished from initial acknowledgement or investigation periods.
Memory trick: Ten business days, the check arrives, no more delays.