Should All States Require Insurance Companies to Turn Claims Files Over to Policyholders?

Property insurance companies are required to turn over claims materials to policyholders in California. Why shouldn’t all states have this requirement?

Within 15 days of a request, these documents must be turned over in California:

All documents that relate to the evaluation of damages, including, but not limited to, repair and replacement estimates and bids, appraisals, scopes of loss, drawings, plans, reports, third-party findings on the amount of loss, covered damages, and cost of repairs, and all other valuation, measurement, and loss adjustment calculations of the amount of loss, covered damage, and cost of repairs.1

A California Department of Insurance memo indicates the reason for the law and the exception to documents that have to be turned over:

The intent behind the requirement that insurers provide claim-related documents is to allow claimants to understand (and potentially contest) the basis for an insurer’s claim valuation. Insurers should determine whether a particular document is a claim-related document with this intent in mind.

The standard form language in section 2071 exempts from the duty to provide claim-related documents ‘[a]ttorney work product and attorney-client privileged documents, and documents that indicate fraud by the insured or that contain medically privileged information.’

In terms of transparency, this is a very good law. I am surprised that it is not required in more states.

Thought For The Day

A lack of transparency results in distrust and a deep sense of insecurity.
—Dalai Lama
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1 Cal. Ins. Code § 2071.
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