Claims Handling Practices and Ethics
Domain 4 tests how Delaware expects claims to be handled and how an adjuster's conduct is judged. The core statute is the Unfair Trade Practices chapter of the Delaware Code, whose unfair claim settlement practice provisions define the standards regulators apply. Ethics questions here are practical: conflicts, documentation, confidentiality and honesty about coverage.
Unfair claim settlement practices
The statute targets conduct rather than outcomes:
- misrepresenting policy provisions or material facts;
- failing to acknowledge claim communications and act reasonably promptly;
- failing to adopt and follow reasonable investigation standards;
- refusing to pay without a reasonable investigation;
- failing to affirm or deny coverage within a reasonable time after proof of loss;
- offering substantially less than the amount ultimately recovered, or compelling litigation through low offers;
- failing to explain a denial or offer and failing to give a reasonable basis for it.
Conduct and ethics
- Give the claim file the attention a jury would give it: date every contact, record who said what, and state the factual basis for each coverage decision. Strangers will read the file years later.
- Disclose your role. Do not discuss a claim with an unrepresented claimant in a way that suggests legal advice, and do not negotiate with a claimant you know is represented.
- Avoid conflicts: no interest in the repair vendor, no undisclosed referral fees, no handling a claim where you or a relative is the insured.
- Protect personal information; share it only as the claim and privacy law require.
- Refer suspected fraud to your special investigation unit and the Department. Do not accuse anyone of fraud in correspondence.
Worked example
Two contractors bid $9,800 and $14,000 on the same scope, and the insured demands the higher figure. The adjuster writes a line-by-line scope, pays reasonable cost to repair with like kind and quality, and sends a written explanation identifying which higher-bid items are betterment or code upgrades not covered by the form. Denying silently or stalling would itself be a listed unfair practice.
Traps that cost marks
- Denying and waiting to be sued.
- Promising coverage before the investigation is complete.
- Settling by phone with no written confirmation.
- Discussing claim details with neighbors, media or the insured's contractor without authority.
- Treating a public adjuster's fee as covered without checking the endorsement.