Which of the following is NOT considered an unfair claims settlement practice?

The correct response is affirming or denying coverage of claims within a reasonable time because this practice aligns with the ethical and legal obligations insurance companies have toward their policyholders. Timely communication regarding the status of a claim is essential in the claims process. When insurers affirm or deny coverage promptly, they demonstrate transparency and respect for the policyholder's situation, leading to a more efficient claims process.

In contrast, delaying claim coverage affirmation can create uncertainty and distress for the claimant, which is why it is considered an unfair practice. Changing policy terms without notifying the insured undermines the fundamental principle of good faith in the contractual relationship; the insured needs to be aware of any changes that could affect their coverage or claims. Refusing to pay a legitimate claim is a significant breach of duty and is reflective of unfair tactics that can harm the policyholder, illustrating a lack of good faith in the settlement process. Thus, timely affirmation or denial of claims is a necessary practice that protects the interests of both insurers and insureds.