§ 31A-26-301. Timely payment of claims.

(1)

(a) Unless otherwise provided by law, an insurer shall timely pay every valid insurance claim made by an insured.

(b) By rule the commissioner may prescribe:

(i) the kinds of notice and proof of loss that will establish validity;

(ii) the manner in which an insurer may make a bona fide denial of a claim;

(iii) the periods of time within which payment is required to be made to be timely; and

(iv) the reasonable interest rates to be charged upon late claim payments.

(2)

(a) Notwithstanding Subsection (1) and subject to Subsection (2)(b), the payment of a claim is not overdue during any period in which:

(i) the insurer is unable to pay the claim because there is no recipient legally able to give a valid release for the payment; or

(ii) the insurer is unable to determine who is entitled to receive the payment.

(b) Subsection (2)(a) applies only if the insurer:

(i) promptly notifies the claimant of the inability to pay the claim; and

(ii) offers in good faith to pay the claim promptly when the inability to pay the claim is removed.

(3) This section applies only to a claim for first party benefits made by a person who is:

(a) named or defined as an insured under the terms of an insurance policy;

(b) described as a covered person under the terms of a policy of health care insurance as defined in Section 31A-1-301; or

(c) named, defined, or described:

(i) as:

(A) an insured;

(B) a beneficiary;

(C) a policyholder; or

(D) otherwise covered person; and

(ii) under the terms of:

(A) a life insurance policy; or

(B) an annuity.

Amended by Chapter 309, 2002 General Session