If an insurer denies a claim, when must they notify the policyholder?

The correct timing for notifying a policyholder when an insurer denies a claim is within 30 days of receiving proof of loss. This requirement ensures that policyholders are promptly informed about the status of their claims, allowing them adequate time to understand the reason for the denial and consider their options, such as appealing the decision or seeking further action.

This 30-day period is a crucial consumer protection measure that acknowledges the importance of transparency and communication in the insurance process. It gives the insurer sufficient time to thoroughly assess the claim and make an informed decision while also ensuring that policyholders are not left in the dark about their claims. This practice not only helps in maintaining trust between insurers and policyholders but also aligns with regulatory requirements aimed at protecting consumer rights.

The other options suggest shorter or immediate notification times that do not align with the established regulations. For instance, immediate notification upon decision may not provide insurers the necessary time to process complex claims adequately. Thus, the 30-day window strikes a balance between thorough investigation and timely communication.