Provides that an insurer doing business in this state shall be liable to a policy holder for such insurer's refusal to pay or unreasonable delay of payment to the policy holder if such refusal or delay was not substantially justified; enumerates instances whereby an insurer's refusal or delay of payment is not substantially justified including intentional negligence, failure to act in good faith, failure to provide written denial of claim, failure to make final determination of claim within six months, and failure to promptly proceed with the appraisal process.
STATE OF NEW YORK
________________________________________________________________________
921
2017-2018 Regular Sessions
IN ASSEMBLY
January 9, 2017
___________
Introduced by M. of A. BICHOTTE -- read once and referred to the Commit-
tee on Insurance
AN ACT to amend the insurance law, in relation to unfair claim settle-
ment practices
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The insurance law is amended by adding a new section 2601-a
2 to read as follows:
3 § 2601-a. Unfair claim settlement practices; civil remedy. (a) An
4 insurer doing business in this state shall be liable to the holder of a
5 policy issued or renewed pursuant to article thirty-four of this chapter
6 for damages as provided in this section upon such policy holder proving
7 by a preponderance of the evidence that such insurer's refusal to pay or
8 unreasonable delay in payment to the policy holder of amounts claimed to
9 be due under a policy was not substantially justified. An insurer is
10 not substantially justified in refusing to pay or in unreasonably delay-
11 ing payment when the insurer:
12 (1) intentionally, recklessly or by gross negligence failed to provide
13 the policy holder with accurate information concerning policy provisions
14 relating to the coverage at issue;
15 (2) failed to effectuate in good faith a prompt, fair and equitable
16 settlement of a claim submitted by such policy holder in which liability
17 of such insurer to such policy holder was reasonably clear;
18 (3) failed to provide a timely written denial of a policy holder's
19 claim with a full and complete explanation of such denial, including
20 references to specific policy provisions wherever possible;
21 (4) failed to make a final determination and notify the policy holder
22 in writing of its position on both liability for, and the insurer's
23 valuation of, a claim within six months of the date on which it received
24 actual or constructive notice of the loss upon which the claim is based;
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02148-01-7
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1 (5) failed to act in good faith by compelling the policy holder to
2 institute suit to recover amounts due under its policy by offering
3 substantially less than the amounts ultimately recovered in suit brought
4 by such policy holder; or
5 (6) failed to promptly proceed with the appraisal process once such
6 has been demanded in any claim where coverage for a portion of the claim
7 has been accepted by such insurer and a disagreement exists between the
8 insured and the insurer with respect to the value of covered property or
9 the amount, or extent of the covered loss.
10 (b) Any policy holder who establishes liability pursuant to subsection
11 (a) of this section shall be entitled to recover, in addition to amounts
12 due under the policy, interest, costs, and disbursements, compensatory
13 damages, consequential damages and reasonable attorneys' fees incurred
14 by the policy holder from the date of the loss, in recovering monies due
15 pursuant to the terms of the policy as well as punitive damages capped
16 at two times the value of the covered loss established at trial.
17 (c) Any policy holder may recover damages from an insurer doing busi-
18 ness in this state pursuant to this section either as part of an action
19 to recover under the terms of an insurance policy or in a separate
20 action.
21 (1) As a condition to any recovery pursuant to subsection (a) of this
22 section, a civil remedy notice of the alleged violation must be filed
23 with both the insurer and the department at least sixty days prior to
24 commencement of an action seeking relief pursuant to subsection (a) of
25 this section.
26 (2) The civil remedy notice must be on a form approved by the depart-
27 ment and include the following information, if such information is
28 reasonably known to the insured:
29 (A) The statutory provision, including the specific language of the
30 statute which the insurer is alleged to have violated.
31 (B) The facts and circumstances giving rise to the violation.
32 (C) The name of any individual involved in the violation.
33 (D) Reference to specific policy language that is relevant to the
34 violation, if any.
35 (E) A statement that the notice is given in order to protect the right
36 to pursue the civil remedy.
37 (3) The insurer who is the subject of the civil remedy notice shall
38 have sixty days from the filing of the required notice to cure the
39 violation. No civil action under this section will be sustainable if,
40 within sixty days after the required notice filing, the damages sought
41 are paid.
42 (4) The rights enumerated herein are not the exclusive remedies avail-
43 able to the insured and do not preclude any common law claims or other
44 statutory claims that may exist.
45 (d) In any trial of a cause of action asserted against an insurer
46 pursuant to this section, evidence of settlement discussions written and
47 verbal offers to compromise, loss reserve amounts and other evidence
48 relating to the claims process shall be admissible. If causes of action
49 relating to liability of the insurer under the policy and under this
50 section are alleged in the same action, the court may bifurcate the
51 trial of issues so as to avoid prejudice to the insurer on the issue of
52 liability under the policy and facilitate admissibility of evidence on
53 the causes of action asserted pursuant to this section.
54 (e) All amounts recovered from an insurer as actual damages, conse-
55 quential damages, reasonable attorneys' fees and punitive damages in any
56 action authorized in this section shall be excluded by the insurer in
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1 its determinations of the premiums it will charge all policy holders on
2 all policies issued by it.
3 § 2. This act shall take effect on the first of January next succeed-
4 ing the date on which it shall have become a law, and shall apply to all
5 acts and omissions by insurers occurring on or after such effective
6 date.
