A. FIRST-PARTY CLAIMS
What is "notification of claim" under Oregon law?
An insured provides "notification of claim" when the insured provides notification to the insurer, either in writing or by other means acceptable under the policy, that reasonably apprises the insurer of facts pertinent to the claim. (OAR 836- 080-0210(6).)
For purposes of the Oregon statute providing attorney fees to claimants who obtain a greater recovery through litigation against the insurer than the amount tendered by the insurer, when settlement is made not within six months from the date proof of loss is filed, Oregon appellate courts have ruled that "proof of loss" means any event or submission that would permit the insurer to estimate its obligations, taking into account the insurer's responsibility to investigate and clarify uncertain claims.
How fast must an insurer respond to a claim, and what information must be provided?
Within 30 days after receiving notification of a claim, an insurer must acknowledge the notification or pay the claim. (OAR 836-080-0225(1).) The insurer also must promptly provide a first-party claimant with necessary forms, instructions, and assistance, so that the claimant can comply with the policy conditions and the insurer's reasonable requirements. (OAR 836-080-0225(4).) The insurer also should disclose all pertinent benefits, coverages, and other provisions of an insurance policy under which the claim might be asserted. (OAR 836-080-0220(1).)
How much time is permitted to investigate a claim?
An insurer must respond to a claim within a reasonable time after receiving an insured's completed proof of loss. (ORS 746.230(1)(e).) Under Oregon's regulations, an insurer must complete its claim investigation within 45 days of receiving the notification of claim, unless the investigation cannot reasonably be completed within that time. (OAR 836-080-0230.) Within 30 day of receiving a completed proof of loss, the insurer must advise the insured that it is accepting or denying the claim or notify the insured as to why it needs additional time for investigation. (OAR 836-080-0235(1), (4).) The insurer must continue notifying the insured of the reason that it needs additional time for investigation every 45 days while the investigation continues. (OAR 836-080-0235(4).)
If an insurer engages in direct negotiations with a first-party claimant for settlement of a claim, and that claimant is neither an attorney nor represented by an attorney, then the insurer must give the claimant written notice that the statute of limitations might be expiring and might affect the claimant's rights, at least 30 days before the time limit expires. (OAR 836-080-0235(6).)
What is required in denying a claim?
If the insurer denies the claim, the insurer must promptly explain the basis for its decision, in light of the policy provisions, the facts of the matter, and the applicable law. (ORS 746.230(1)(m).) The denial must be in writing and it must reference the specific policy provisions upon which the denial is based. (OAR 836-080-0235(1).)
What constitutes unfair claims practice in Oregon?
Oregon's statues and regulations prohibit insurers from committing or performing unfair claim settlement practices, including (but not limited to):
- Misrepresenting facts or policy provisions in settling claims;
- Failing to acknowledge and act promptly upon communications relating to claims;
- Failing to adopt and implement reasonable standards for the prompt investigation of claims;
- Refusing to pay claims without conducting a reasonable investigation based on all available information;
- Failing to affirm or deny coverage of claims within a reasonable time after completed proof of loss statements have been submitted;
- Not attempting, in good faith, to promptly and equitably settle claims in which liability has become reasonably clear;
- Compelling insureds to initiate litigation to recover amounts due by offering substantially less than amounts ultimately recovered in actions brought by such insureds;
- Failing to promptly settle claims under one coverage of a policy where liability has become reasonably clear in order to influence settlements under other coverages of the policy; or
- Failing to promptly provide the proper explanation of the basis relied on in the insurance policy in relation to the facts or applicable law for the denial of a claim.
- Concealing from an insured any insurance policy benefits, coverages, or other provisions that are pertinent to the claim.
(ORS § 746.230 (1); OAR 836-080-0220.) Under Oregon law, no private right of action is created by an alleged violation of the unfair claim settlement statutes.
What should an insurer know about releases?
An insurer cannot ask a first-party claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment. (OAR 836-080-0220(5)).The insurer also must not issue checks or drafts in partial settlement of a loss or claim under a specific policy coverage that contain language releasing the insurer or its insured from its total liability in the matter. (OAR 836-080-0220(6).)
What if a claim is made under an automobile policy?
Special claim settlement rules apply to claims made under automobile policies.
What if an inquiry is made by the Insurance Division of the Oregon Department of Consumer and Business Services?
An insurer must respond to an inquiry from the Department of Consumer and Business Services with an "adequate response" within 21 days. (OAR 836-080-0225(2).)
When does a "loss" occur?
Oregon courts have not definitely decided when a "loss" occurs, in the first-party context, but they have rejected the argument that a loss does not occur until it is discovered.
B. THIRD-PARTY CLAIMS
How quickly must an insurer respond to a claim or tender?
The time limits pertaining to an insurer's acknowledgement and investigation do not distinguish between first- and third-party claims.Thus, the acknowledgement and investigation time limits described above should apply in the third-party context.
As a practical matter, however, an answer to an Oregon state court lawsuit is due within 30 days of service. As such, when a state court case is tendered and an insured is unrepresented, the insurer should move quickly to protect the insured from default.
What must be considered in evaluating if a defense should be provided?
In determining whether an insurer has a duty to defend an insured, Oregon courts consider only two documents: the complaint filed against the insured and the insurance policy. If the complaint, without amendment, alleges facts that could be used to prove liability covered by the policy, then the insurer has a duty to defend.The complaint need not plead the claims in perfect form. Any ambiguity in the allegations is construed against the insurer.
The duty to defend is independent of the duty to indemnify.Therefore, although the issue has not been definitively resolved in Oregon, the duty to defend probably continues throughout the course of the litigation, even if becomes clear that the insured will not be liable for any conduct covered by the policy.
Does an insurer have a duty to hire independent counsel?
Oregon law does not require an insurer defending its insured under a reservation of rights to appoint an independent defense counsel of the insured's choice. An insurer must retain competent defense counsel. Pursuant to case law and Oregon's ethical guidelines, the defense counsel must investigate and defend the case properly and may not take any actions that would adversely affect the insured's right to a defense or coverage.
When is the duty to indemnify triggered?
Whether an insurer has a duty to indemnify an insured is determined by the actual facts proven in the underlying action. Unlike the duty to defend, a duty to indemnify that turns on unresolved facts cannot be determined until the underlying action is concluded. An insurer has a duty to indemnify only when the insured is held liable for conduct covered by the policy.
Must a claimant be told that a statute of limitations will run?
If an insurer engages in direct negotiations with a third-party claimant for settlement of a claim, and that claimant is neither an attorney nor represented by an attorney, the insurer must give the claimant written notice that the statute of limitations might be expiring and might affect the claimant's rights, at least 60 days before the time limit expires. (OAR 836- 080-0235(6).)
A person making an "advance payment" to or on behalf of an injured party must provide written notice of the date of the expiration of the statute of limitations no later than 30 days after the advance payment is made, or the statute of limitations is tolled. (ORS 12.155.)
This summary is not intended to constitute legal advice, nor does it create an attorney-client relationship.The laws referenced in this guide are current as of printing and may change.