Which of the following is an unfair claims settlement practice under the North Carolina Unfair Trade Practices Article?

Why C is correct

The Unfair Trade Practices Article (G.S. 58-63-15) enumerates unfair claims settlement practices, including failing to affirm or deny coverage of claims within a reasonable time after proof-of-loss requirements are completed and failing to act promptly on communications relating to claims. The other choices describe lawful, proper claims handling: a written denial with specific reasons, a reasonable proof-of-loss requirement, and prompt settlement are exactly the conduct the statute expects of insurers.

Why the other options are wrong

• A: A written denial stating specific reasons is proper claims practice, not an unfair practice.
• B: Conditioning payment on a signed proof of loss is permitted; the form and time limits for proof come from the policy's standard provisions (G.S. 58-51-15).
• D: Prompt settlement after the insurer receives the needed documentation is the conduct the statute encourages, so it cannot be an unfair claims settlement practice.

Memory hook

Unfair claims = dragging feet: no timely affirm-or-deny.

Why A is correct

G.S. 58-63-15(11) enumerates unfair claims settlement practices, including misrepresenting pertinent facts or insurance policy provisions relating to the coverages at issue, failing to acknowledge and act promptly on communications, and failing to attempt in good faith to effect prompt, fair, and equitable settlements. Committing such acts with such frequency as to indicate a general business practice violates Article 63.

Why the other options are wrong

• B) Prompt acknowledgment and action on claim communications is what G.S. 58-63-15(11) requires; failing to do so is the unfair practice.
• C) Prompt payment after due proof of loss satisfies the statute — the unfair practice is failing to attempt good-faith prompt settlements.
• D) Explaining the coverage basis for a claim decision is proper conduct, not a misrepresentation prohibited by G.S. 58-63-15(11).

Memory hook

Unfair = misrepresent facts or drag your feet; fair = acknowledge, explain, pay.