Key Takeaways
- Nebraska requires insurers to acknowledge claims within 15 business days of receipt
- Claims must be investigated promptly and decisions communicated in writing
- Unfair claims settlement practices include unreasonable delays, lowball offers, and misrepresenting coverage
- Producers have ethical obligations to assist clients with claims while avoiding fraud
- The Nebraska Unfair Claims Settlement Practices Act protects consumers from improper claims handling
Last updated: January 2026
Claims Handling Ethics and Standards
Nebraska Claims Handling Requirements
Statutory Timeline
Nebraska's Unfair Claims Settlement Practices Act establishes requirements for claims handling:
| Requirement | Timeframe |
|---|---|
| Acknowledge claim receipt | Within 15 business days |
| Begin investigation | Promptly upon acknowledgment |
| Request additional information | Within 30 days if needed |
| Accept or deny claim | Within 30 days of complete information |
| Pay undisputed amounts | Within 45 days of agreement |
| Provide written explanation | For any denial or partial payment |
Claims Handling Standards
Insurers and their representatives must:
| Standard | Requirement |
|---|---|
| Good Faith | Handle claims fairly and honestly |
| Timeliness | Process claims without unreasonable delay |
| Communication | Keep claimants informed of status |
| Documentation | Maintain complete claims records |
| Accuracy | Investigate facts thoroughly |
| Explanation | Provide clear reasons for decisions |
Unfair Claims Settlement Practices
Prohibited Practices
Nebraska prohibits these unfair claims practices:
| Practice | Description |
|---|---|
| Misrepresenting coverage | Telling claimant coverage doesn't exist when it does |
| Unreasonable delays | Failing to process claims promptly |
| Lowball offers | Offering less than reasonable claim value |
| Denying without investigation | Rejecting claims without proper review |
| Requiring unnecessary documentation | Creating excessive barriers |
| Failing to explain denials | Not providing written reasons |
| Threatening litigation | To discourage legitimate claims |
| Settling for less than minimum | Below policy limits when full amount owed |
Examples of Unfair Practices
| Unfair Practice | Why It's Wrong |
|---|---|
| "Your policy doesn't cover this" (when it does) | Misrepresentation |
| Waiting 6 months to investigate | Unreasonable delay |
| Offering $5,000 on a $20,000 claim | Lowball offer |
| Denying without reviewing evidence | No investigation |
| Requiring 10 estimates when 2 are standard | Excessive documentation |
| "We denied it, that's final" | No written explanation |
Penalties for Unfair Practices
| Violation | Consequence |
|---|---|
| Pattern of violations | Fine up to $10,000 per violation |
| Single violation | Warning to cease and desist |
| Repeated violations | License suspension or revocation |
| Bad faith claims | Insured may sue for damages |
| Market conduct exam findings | Corrective action required |
Exam Tip: A single unfair claims practice may warrant a warning, but a pattern of violations results in significant penalties including fines and license action.
Producer Role in Claims
Appropriate Producer Activities
| Activity | Appropriate? | Notes |
|---|---|---|
| Explain claims process | Yes | Help client understand steps |
| Assist with documentation | Yes | Help gather needed information |
| Communicate with insurer | Yes | As client's representative |
| Advocate for fair treatment | Yes | Ensure proper handling |
| Provide status updates | Yes | Keep client informed |
| Review claim offers | Yes | Help client understand |
Inappropriate Producer Activities
| Activity | Why Inappropriate |
|---|---|
| Inflating claim values | Fraud |
| Creating false documentation | Fraud |
| Advising clients to lie | Fraud |
| Interfering with investigation | Obstruction |
| Making promises about outcomes | Cannot guarantee |
| Practicing law | Unlicensed practice |
Ethical Claims Assistance
When helping clients with claims, producers should:
- Be Truthful - Never misrepresent facts
- Be Accurate - Document claims correctly
- Be Prompt - Report claims immediately
- Be Supportive - Help but don't overpromise
- Be Objective - Present facts, not opinions on coverage
Claims Fraud Prevention
Red Flags for Fraud
Producers should be alert to potential fraud indicators:
| Red Flag | Description |
|---|---|
| Recent policy change | Coverage increased before loss |
| Financial stress | Motive for fraudulent claim |
| Inconsistent statements | Story changes over time |
| Previous claims history | Pattern of suspicious claims |
| Staged losses | Evidence of manufactured damage |
| Inflated values | Claims exceeding actual loss |
| Reluctant to provide info | Avoiding documentation |
Producer Obligations
When fraud is suspected:
| Obligation | Action |
|---|---|
| Do not participate | Refuse to assist with fraudulent claim |
| Report suspicions | Notify insurer of concerns |
| Document observations | Keep records of red flags |
| Cooperate with investigation | Assist SIU if asked |
| Protect confidentiality | Don't accuse without basis |
Fraud Reporting
Nebraska Insurance Fraud Prevention Division:
- Part of Department of Insurance
- Investigates fraud allegations
- Coordinates with law enforcement
- Accepts reports from producers and public
Catastrophe Claims
Severe Weather Claims in Nebraska
After major weather events (tornadoes, hail storms):
- Catastrophe response teams deployed
- Mobile claims units may be used
- Expedited claims processing
- Advance payments available
- Temporary housing assistance
Producer Role in Catastrophe Claims
| Role | Action |
|---|---|
| Immediate contact | Reach out to affected clients |
| Claims reporting | Help clients report losses |
| Documentation guidance | Advise on photos, inventory |
| Insurer communication | Facilitate contact |
| Follow-up | Monitor claim progress |
Avoiding Catastrophe Fraud
After major events, fraud attempts increase:
- Inflated damage claims
- Pre-existing damage included
- Fake contractor schemes
- "Storm chasers" exploiting victims
Producers should:
- Advise clients to use reputable contractors
- Warn about fraud schemes
- Report suspicious activity
- Document legitimate damage thoroughly
Consumer Assistance
Helping Clients with Disputes
If a client disputes a claims decision:
- Review the Policy - Understand coverage terms
- Request Explanation - Get insurer's reasons in writing
- Gather Documentation - Compile supporting evidence
- Escalate Within Company - Request supervisory review
- File Complaint if Needed - Contact NDOI Consumer Services
Appraisal Process
Many Nebraska policies include appraisal provisions:
- Each party selects an appraiser
- Appraisers select an umpire
- Majority decision is binding
- Useful for amount disputes (not coverage)
Department of Insurance Assistance
NDOI can help with:
- Claim handling complaints
- Coverage interpretation questions
- Unfair treatment allegations
- Mediation of disputes
Contact: (877) 564-7323
Professional Summary
The Ethical Claims Producer
An ethical Nebraska producer:
- Helps clients report claims accurately
- Documents losses thoroughly and honestly
- Advocates for fair treatment
- Never participates in fraud
- Reports suspected fraud appropriately
- Maintains professional boundaries
- Follows up on claim status
- Explains decisions clearly
- Assists with appeals if warranted
- Refers to professionals when needed
Exam Tip: The key to ethical claims handling is honesty and accuracy. Help clients document legitimate losses thoroughly, but never assist with inflating or fabricating claims.
Test Your Knowledge
Within how many business days must Nebraska insurers acknowledge receipt of a claim?
A
B
C
D
Test Your Knowledge
Which of the following is an unfair claims settlement practice?
A
B
C
D
Test Your Knowledge
A client asks you to help document damage that you know occurred before the covered event. What should you do?
A
B
C
D
Congratulations!
You've completed this section
Continue exploring other exams