Which statement is true regarding elements of good-faith claim handling?

Which statement is true regarding elements of good-faith claim handling?

• A. Claim representatives should rely on instincts rather than policy provisions
• B. Policy provisions, such as arbitration clauses, should be used when applicable
• C. Arbitration clauses should never be used
• D. Disputes should be unresolved and ignored

Answer: (B)

In good-faith claim handling, the claim decision should be grounded in the actual policy language and the dispute-resolution terms the contract provides. If a policy includes an arbitration clause or other agreed-upon dispute mechanism, that mechanism should be used when it applies. Using arbitration respects the contract both parties agreed to, helps ensure consistent interpretation of coverage, and can resolve disputes more efficiently and privately than going to court. Relying on instincts or ignoring contract provisions would undermine fairness and the insurer’s obligation to follow the policy terms, while leaving disputes unresolved fails to provide a timely, fair resolution.

In good-faith claim handling, the claim decision should be grounded in the actual policy language and the dispute-resolution terms the contract provides. If a policy includes an arbitration clause or other agreed-upon dispute mechanism, that mechanism should be used when it applies. Using arbitration respects the contract both parties agreed to, helps ensure consistent interpretation of coverage, and can resolve disputes more efficiently and privately than going to court. Relying on instincts or ignoring contract provisions would undermine fairness and the insurer’s obligation to follow the policy terms, while leaving disputes unresolved fails to provide a timely, fair resolution.