2.3 Ohio Property Claims Handling

Unfair Claims Settlement Practices (OAC 3901-1-54)

Ohio's claim-handling timetable lives in the Ohio Administrative Code rule 3901-1-54, the Unfair Property/Casualty Claims Settlement Practices rule, and in the Unfair Insurance Trade Practices Act (ORC 3901.20–.21). The headline deadline is the 15-day acknowledgment: an insurer must acknowledge a claim within 15 days of receiving notice. It can satisfy that duty by paying within the 15 days or by sending the claimant the necessary forms and instructions.

Exam trap: "Days" in this rule means calendar days; when the last day falls on a Saturday, Sunday, or holiday the deadline rolls to the next business day.

During the investigation, the insurer must act in good faith: investigate promptly and thoroughly, keep records, communicate regularly with the insured, give a reasonable basis for any denial, and never misrepresent policy provisions. A pattern of these failures is an unfair claims practice that the ODI can fine and that supports license discipline.

Public Adjusters (ORC Chapter 3951)

A public adjuster is hired by the insured (not the insurer) to negotiate the claim. Ohio licenses and bonds them:

Conduct restrictions

Ohio bars a public adjuster from soliciting a loss while a fire is in progress or while the fire department is still engaged at the damaged premises — protecting shocked owners from high-pressure pitches. A public adjuster also may not repair, remodel, or replace the damaged property they are adjusting (a conflict of interest), may not pay the insured part of the fee as an inducement, may not misrepresent themselves as the company's adjuster, and may not practice law.

Three types of adjuster (know the difference)

A frequent exam distractor pairs the public adjuster with the insurer — they are the only one of the three who represents the policyholder and is paid by the policyholder. Their fee is typically a percentage of the recovered claim and must be stated in the written contract, which Ohio consumers may cancel within the disclosed rescission window.

Appraisal Clause

Nearly every Ohio property policy contains an appraisal provision to break a deadlock over the dollar amount of a covered loss. Either party may invoke it.

1. Demand — one party makes a written demand for appraisal.
2. Appraisers — each side hires and pays its own competent, impartial appraiser.
3. Umpire — the two appraisers pick an umpire; if they cannot agree, a court appoints one. Each party splits the umpire's cost.
4. Award — agreement of any two of the three (two appraisers, or one appraiser plus the umpire) sets the amount of loss and is binding.

Exam trap: Appraisal settles how much, never whether the loss is covered. A coverage dispute — is this peril even insured? — is a legal question for the courts, not appraisal.

Bad-Faith Claims Handling

Ohio recognizes an insurer's duty of good faith to its own insured. Under the leading Ohio Supreme Court standard, an insurer commits bad faith when it refuses to pay a claim without reasonable justification. Conduct that supports a bad-faith claim:

• Failing to investigate promptly or at all
• Denying a claim with no reasonable basis
• Unreasonable delay in payment or communication
• Misrepresenting policy terms
• Offering far less than a claim's reasonable value ("lowballing")

Worked example: a carrier sits on a clearly covered $40,000 fire claim for months with no investigation and offers $8,000. Beyond the $40,000 it owes, an Ohio court could add consequential damages and, on proof of malice, punitive damages plus attorney's fees.

Catastrophe Claims

After a declared disaster, ODI may relax procedures: extended filing deadlines, emergency/temporary adjuster licensing so out-of-state catastrophe teams can work, stepped-up anti-fraud and consumer-protection enforcement, and special bulletins waiving routine paperwork to speed payments.