West Virginia Property and Casualty Licensing Practice Exam 2025 – Your Complete All-in-One Study Guide for Exam Success!

An unfair claim practice is any act that violates the principles of fairness, honesty, or integrity in the handling and settlement of insurance claims. The correct answer illustrates a situation in which an insurer improperly avoids fulfilling its obligation to settle a claim. This could involve methods such as denying coverage without a thorough investigation, applying incorrect or misleading interpretations of policy language, or creating unnecessary obstacles for the claimant. Such actions undermine consumer trust in the insurance process and can lead to significant financial harm for policyholders who are legitimately entitled to benefits under their insurance policies.

In the context of the other options, issuing a denial without investigation is also an unfair practice but would be considered a specific instance of improper claims handling, rather than a broader avoidance of a claim. Adjusting claims to their fair value and providing timely claim payments are both practices that reflect adherence to fair practices in insurance, showcasing how an insurer should responsibly handle claims to protect the interests of policyholders.