SENATE BILL No. 120
DIGEST OF INTRODUCED BILL
Citations Affected: IC 27-4-1; IC 27-4-1.7.
Synopsis: Motor vehicle insurance claim settlement. Requires a motor
vehicle insurer to make a good faith effort to contact a policyholder and
any other individual necessary to resolve a claim for damage to a third
party. Requires settlement of certain claims after 30 days. Makes a
violation of the requirement an unfair claim settlement practice.
Effective: July 1, 2012.
January 4, 2012, read first time and referred to Committee on Insurance and Financial
Second Regular Session 117th General Assembly (2012)
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between statutes enacted by the 2011 Regular Session of the General Assembly.
SENATE BILL No. 120
A BILL FOR AN ACT to amend the Indiana Code concerning
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 27-4-1-4.5; (12)IN0120.1.1. -->
SECTION 1. IC 27-4-1-4.5 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 4.5. The following are
unfair claim settlement practices:
(1) Misrepresenting pertinent facts or insurance policy provisions
relating to coverages at issue.
(2) Failing to acknowledge and act reasonably promptly upon
communications with respect to claims arising under insurance
(3) Failing to adopt and implement reasonable standards for the
prompt investigation of claims arising under insurance policies.
(4) Refusing to pay claims without conducting a reasonable
investigation based upon all available information.
(5) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss statements have been
(6) Not attempting in good faith to effectuate prompt, fair, and
equitable settlements of claims in which liability has become
(7) Compelling insureds to institute litigation to recover amounts
due under an insurance policy by offering substantially less than
the amounts ultimately recovered in actions brought by such
(8) Attempting to settle a claim for less than the amount to which
a reasonable individual would have believed the individual was
entitled by reference to written or printed advertising material
accompanying or made part of an application.
(9) Attempting to settle claims on the basis of an application that
was altered without notice to or knowledge or consent of the
(10) Making claims payments to insureds or beneficiaries not
accompanied by a statement setting forth the coverage under
which the payments are being made.
(11) Making known to insureds or claimants a policy of appealing
from arbitration awards in favor of insureds or claimants for the
purpose of compelling them to accept settlements or compromises
less than the amount awarded in arbitration.
(12) Delaying the investigation or payment of claims by requiring
an insured, a claimant, or the physician of either to submit a
preliminary claim report and then requiring the subsequent
submission of formal proof of loss forms, both of which
submissions contain substantially the same information.
(13) Failing to promptly settle claims, where liability has become
reasonably clear, under one (1) portion of the insurance policy
coverage in order to influence settlements under other portions of
the insurance policy coverage.
(14) Failing to promptly provide a reasonable explanation of the
basis in the insurance policy in relation to the facts or applicable
law for denial of a claim or for the offer of a compromise
(15) In negotiations concerning liability insurance claims,
ascribing a percentage of fault to a person seeking to recover from
an insured party, in spite of an obvious absence of fault on the
part of that person.
(16) The unfair claims settlement practices defined in
(17) A violation of IC 27-4-1.7.
SOURCE: IC 27-4-1.7; (12)IN0120.1.2. -->
SECTION 2. IC 27-4-1.7 IS ADDED TO THE INDIANA CODE
AS A NEW
CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2012]:
Chapter 1.7. Motor Vehicle Insurance Claim Settlement
Sec. 1. As used in this chapter, "motor vehicle insurance" means
the kind of insurance described in Class 2(f) of IC 27-1-5-1.
Sec. 2. (a) If an insurer receives a claim for damage that:
(1) resulted from a motor vehicle accident that is alleged to be
the fault of an insured under a motor vehicle insurance policy
issued by the insurer; and
(2) was incurred by a third party;
the insurer shall immediately begin to make good faith efforts to
contact the policyholder and any other individual necessary to
resolve the claim.
(b) An insurer that is unable to contact the policyholder or
another individual as required by subsection (a) shall not require
the third party to attempt to contact the policyholder or other
Sec. 3. If:
(1) thirty (30) days have elapsed after a claim described in
section 2 of this chapter was filed;
(2) the insurer has been unsuccessful in making the contacts
described in section 2(a) of this chapter;
(3) a police report concerning the accident has been filed; and
(4) the third party does not object to settlement of the claim
based on the information contained in the police report;
the insurer shall settle the claim with the third party, basing fault
on the information obtained from the police report.
Sec. 4. A violation of this chapter is an unfair claim settlement
practice under IC 27-4-1-4.5.