Which of the following is an example of unfair claims practice?

Failing to effectuate prompt, fair, and equitable claim settlements is a clear example of unfair claims practice because it directly contradicts the obligations insurers have to their policyholders. Insurance companies have a legal and ethical duty to handle claims in a timely and just manner, ensuring that claims are settled fairly as per the terms of the policy. When an insurer delays or fails to respond to a claim adequately, this can result in financial distress for the policyholder and can lead to significant dissatisfaction and erosion of trust in the insurance process.

In contrast, providing clear information on policy coverage, offering additional coverage options, and issuing timely payments once claims are approved are practices that reflect good faith and responsible management of insurance claims. These actions demonstrate transparency, enhance customer understanding, and adhere to contractual obligations, all of which are important components of fair claims handling. Thus, they do not constitute unfair practices but rather illustrate positive behaviors expected of an insurer.