Relates to unfair claim settlement practices; provides that plaintiff may recover interest, costs and disbursements; compensatory damages, consequential damages and reasonable attorneys' fees in addition to amounts due under the policy when the insurer refused to pay or unreasonable delay of payment was not reasonably justified.
STATE OF NEW YORK
________________________________________________________________________
5623--B
2019-2020 Regular Sessions
IN ASSEMBLY
February 14, 2019
___________
Introduced by M. of A. WEINSTEIN, CUSICK, CYMBROWITZ, JAFFEE, HYNDMAN,
PAULIN, COLTON, ABINANTI, SEAWRIGHT, SANTABARBARA, ZEBROWSKI, TAYLOR,
CARROLL, DINOWITZ, WEPRIN, JACOBSON, GOTTFRIED, SIMON, GRIFFIN -- read
once and referred to the Committee on Insurance -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee -- recommitted to the Committee on Insurance in
accordance with Assembly Rule 3, sec. 2 -- committee discharged, bill
amended, ordered reprinted as amended and recommitted to said commit-
tee
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) The
4 holder of a policy issued or renewed pursuant to article thirty-four of
5 this chapter shall have a private right of action against any insurer
6 doing business in this state for damages as provided in this section
7 upon such policyholder proving by a preponderance of the evidence that
8 such insurer's refusal to pay or unreasonable delay in payment to the
9 policyholder of amounts claimed to be due under a policy was not reason-
10 ably justified. An insurer is not reasonably justified in refusing to
11 pay or in unreasonably delaying payment when the insurer:
12 (1) failed to provide the policyholder with accurate information
13 concerning policy provisions relating to the coverage at issue;
14 (2) failed to effectuate a prompt and fair settlement of a claim or
15 any portion thereof, and the insurer failed to reasonably accord at
16 least equal or more favorable consideration to its insured interest as
17 it did to its own interests, and thereby exposed the insured to a judg-
18 ment in excess of the policy limits;
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD00885-04-0
A. 5623--B 2
1 (3) failed to provide a timely written denial of a policyholder's
2 claim with a full and complete explanation of such denial, including
3 references to specific policy provisions wherever possible;
4 (4) failed to make a final determination and notify the policyholder
5 in writing of its position on both liability for and the insurer's valu-
6 ation of a claim within six months of the date on which it received
7 actual or constructive notice of the loss upon which the claim is based;
8 (5) failed to act in good faith by compelling a policyholder to insti-
9 tute suit to recover amounts due under its policy by offering substan-
10 tially less than the amounts ultimately recovered in suit brought by
11 such policyholder;
12 (6) failed to advise a policyholder that a claim may exceed policy
13 limits, that counsel assigned by the insurer may be subject to a
14 conflict of interest, or that the policyholder may retain independent
15 counsel;
16 (7) failed to provide, on request of the policyholder or their repre-
17 sentative, all reports, letters or other documentation arising from the
18 investigation of a claim and evaluating liability for or valuation of
19 such claim;
20 (8) refused to pay a claim without conducting a reasonable investi-
21 gation;
22 (9) negotiated or settled a claim directly with a policyholder known
23 to be represented by an attorney without the attorney's knowledge or
24 consent. The provisions of this paragraph shall not be deemed to prohib-
25 it routine inquiries to a policyholder to obtain details concerning the
26 claim;
27 (10) failed to pay on one or more elements of a claim where a prepon-
28 derance of the evidence establishes the claim as to liability notwith-
29 standing the existence of disputes as to other elements of the claim
30 where such payment can be made without prejudice to either party; or
31 (11) acted in violation of section two thousand six hundred one of
32 this article or any regulation promulgated pursuant thereto.
33 (b) Any policyholder who establishes liability pursuant to subsection
34 (a) of this section shall be entitled to recover, in addition to amounts
35 due under the policy, interest, costs and disbursements, compensatory
36 damages, consequential damages, and reasonable attorneys' fees incurred
37 by the policyholder from the date of the loss, in recovering monies due
38 pursuant to the terms of the policy, as well as such additional punitive
39 damages as the court may allow. For purposes of this section, it shall
40 be presumed that consequential damages were within the contemplation of
41 the parties at the time of contracting.
42 (c) Any policyholder may recover damages from an insurer doing busi-
43 ness in this state pursuant to this section either as part of an action
44 to recover under the terms of an insurance policy or in a separate
45 action.
46 (d) In any trial of a cause of action asserted against an insurer
47 pursuant to this section, evidence of settlement discussions written and
48 verbal offers to compromise and other evidence relating to the claims
49 process shall be admissible. If causes of action relating to liability
50 of the insurer under the policy and under this section are alleged in
51 the same action, the court may bifurcate the trial of issues so as to
52 avoid prejudice to the insurer on the issue of liability under the poli-
53 cy and facilitate admissibility of evidence on the causes of action
54 asserted pursuant to this section.
55 (e) All amounts recovered from an insurer as damages and reasonable
56 attorneys' fees in any action authorized in this section shall be
A. 5623--B 3
1 excluded by the insurer in its determinations of the premiums it will
2 charge all policyholders on all policies issued by it.
3 (f) Nothing in this section shall be construed to limit a
4 policyholder's right to a trial by jury for any claims arising under
5 this section.
6 (g) An action may also be maintained by the persons identified in
7 paragraphs one, two and three of subsection (b) of section three thou-
8 sand four hundred twenty of this chapter against an insurer to recover
9 damages including compensatory damages, punitive damages as the court
10 may allow, and interest measured from the time of failure to offer a
11 fair and reasonable settlement in accordance with this section, from
12 such insurer to the full extent of the judgment against the insured, not
13 limited to the policy limits and not subject to the limitations and
14 conditions of paragraph two of subsection (a) of section three thousand
15 four hundred twenty of this chapter, where a preponderance of the
16 evidence establishes that the insurer failed to effectuate a prompt and
17 fair settlement of a claim or any portion thereof, and where under the
18 totality of the facts and circumstances related to the claim, the insur-
19 er failed to reasonably accord at least equal or more favorable consid-
20 eration to its insured's interests as it did to its own interests, and
21 thereby exposed the insured to a judgment in excess of the policy
22 limits.
23 (h) The rights enumerated in this section are not the exclusive reme-
24 dies available to the policyholder and do not preclude any common law
25 claims or other statutory claims that may exist or rise.
26 § 2. Section 3425 of the insurance law is amended by adding a new
27 subsection (t) to read as follows:
28 (t) No insurer shall refuse to issue or renew a covered policy solely
29 on the ground that the policyholder has brought an action pursuant to
30 section two thousand six hundred one-a of this chapter.
31 § 3. Paragraph 4 of subsection (a) of section 2601 of the insurance
32 law, as amended by chapter 547 of the laws of 1997, is amended to read
33 as follows:
34 (4) [not attempting in good faith] where the insurer failed to effec-
35 tuate a prompt[,] and fair [and equitable settlements] settlement of
36 [claims submitted in which liability has become reasonably clear] a
37 claim or any portion thereof, and the insurer failed to reasonably
38 accord at least equal or more favorable consideration to its insured's
39 interests as it did to it own interests, and thereby exposed the insured
40 to a judgment in excess of the policy limits, except where there is a
41 reasonable basis supported by specific information available for review
42 by the department that the claimant has caused the loss to occur by
43 arson. After receiving a properly executed proof of loss, the insurer
44 shall advise the claimant of acceptance or denial of the claim within
45 thirty working days;
46 § 4. This act shall take effect on the first of January next succeed-
47 ing the date on which it shall have become a law, and shall apply to all
48 acts and omissions by insurers occurring on or after such effective
49 date.