A05780 Summary:

SAME ASNo same as
COSPNSRTitone, Weisenberg, Abinanti, Weprin, Malliotakis, Titus, Cusick
MLTSPNSRJacobs, Perry
Amd S2601, Ins L
Establishes a private right of action for the insured for unfair insurance settlement practices when the claim relates to loss or injury in an area where the governor has declared a disaster emergency.
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A05780 Actions:

03/06/2013referred to insurance
05/23/2013reported referred to codes
05/31/2013advanced to third reading cal.471
06/04/2013passed assembly
06/04/2013delivered to senate
01/08/2014DIED IN SENATE
01/08/2014ordered to third reading cal.270
01/22/2014committed to insurance
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A05780 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
SPONSOR: Weinstein
  TITLE OF BILL: An act to amend the insurance law, in relation to establishing a private right of action for unfair claim settlement prac- tices by an insurer   PURPOSE OF BILL: This bill amends the insurance law by establishing a private right of action for consumers who have been affected by unfair claims practices by insurers and also provides for punitive damages where there is a finding of an insurer's willful or knowing violation of section 2601 of the insurance law. The bill would apply to any loss or injury sustained relating to an insurance claim for property damage in an area affected encompassed by executive order declaring a disaster emergency as per section twenty-eight of the Executive Law.   SUMMARY OF PROVISIONS OF BILL: Section 1 would create a private right of action for any unfair claims practices by insurers relative to a disaster emergency as per section twenty-eight of the Executive Law. Section 2 is the effective date.   JUSTIFICATION: Unfortunately, there is evidence that some insurers have taken advantage of insured as concerns the adjusting of losses sustained in disaster emergencies declared by the Governor pursuant to section twenty-eight of the Executive Law. Insurers have every right to attempt to lawfully deny claims, but all too often these attempts create unreasonable situations for homeowners attempting to simply access the benefits to which they are entitled. This is especially acute in situations where the homeowner may have lost most or even all of their possessions due to a storm declared emergency. This bill would allow insureds to institute claims against their insur- ers for unfair claims practices proscribed by the Insurance Law. More importantly, this bill would amend section 2601 of the Insurance Law to allow insured homeowners who have suffered property loss to take direct action against their insurers for unfair claims practices where the claimed losses were sustained within the area declared as a disaster emergency. A private right of action is necessary, in addition to the possibility of administrative action, to make certain that insurers are held responsible for unfair claims practices. Additionally, this proposal would permit an award of punitive damages for an insurer's willful unfair claims practices in violation of section 2601 of the insurance law.   LEGISLATIVE HISTORY: New bill, 2013.   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.   EFFECTIVE DATE: Immediately.
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A05780 Text:

                STATE OF NEW YORK
                               2013-2014 Regular Sessions
                   IN ASSEMBLY
                                      March 6, 2013
        Introduced  by  M.  of  A.  WEINSTEIN  --  read once and referred to the
          Committee on Insurance
        AN ACT to amend the insurance law, in relation to establishing a private
          right of action for unfair claim settlement practices by an insurer
          The People of the State of New York, represented in Senate and  Assem-

        bly, do enact as follows:
     1    Section  1.  Section  2601 of the insurance law, paragraphs 4 and 5 of
     2  subsection (a) as amended by chapter 547 of the laws of 1997  and  para-
     3  graph 6 of subsection (a) as amended by chapter 388 of the laws of 2008,
     4  is amended to read as follows:
     5    §  2601.  Unfair claim settlement practices; penalties. (a) No insurer
     6  doing business in this state shall engage  in  unfair  claim  settlement
     7  practices. Any of the following acts by an insurer, if committed without
     8  just  cause  and  performed with such frequency as to indicate a general
     9  business practice, shall constitute unfair claim settlement practices:
    10    (1) knowingly misrepresenting to claimants pertinent facts  or  policy
    11  provisions relating to coverages at issue;
    12    (2) failing to acknowledge with reasonable promptness pertinent commu-

    13  nications as to claims arising under its policies;
    14    (3) failing to adopt and implement reasonable standards for the prompt
    15  investigation of claims arising under its policies;
    16    (4)  not attempting in good faith to effectuate prompt, fair and equi-
    17  table settlements of claims submitted  in  which  liability  has  become
    18  reasonably  clear, except where there is a reasonable basis supported by
    19  specific information available for review by  the  department  that  the
    20  claimant  has caused the loss to occur by arson. After receiving a prop-
    21  erly executed proof of loss, the insurer shall advise  the  claimant  of
    22  acceptance or denial of the claim within thirty working days;
    23    (5) compelling policyholders to institute suits to recover amounts due
    24  under its policies by offering substantially less than the amounts ulti-
    25  mately recovered in suits brought by them; [or]

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 5780                             2
     1    (6)  failing  to promptly disclose coverage pursuant to subsection (d)
     2  or subparagraph (A) of paragraph two of subsection (f) of section  three
     3  thousand four hundred twenty of this chapter.
     4    (b)  Evidence  as to numbers and types of complaints to the department
     5  against an insurer and as to the department's complaint experience  with
     6  other insurers writing similar lines of insurance shall be admissible in
     7  evidence in any administrative or judicial proceeding under this section
     8  or  article  twenty-four or seventy-four of this chapter, but no insurer

     9  shall be deemed in violation of this section solely  by  reason  of  the
    10  numbers and types of such complaints.
    11    (c)  If it is found, after notice and an opportunity to be heard, that
    12  an insurer has violated this section,  each  instance  of  noncompliance
    13  with  subsection  (a) [hereof] of this section may be treated as a sepa-
    14  rate violation of this section  for  purposes  of  ordering  a  monetary
    15  penalty  pursuant  to subsection (b) of section one hundred nine of this
    16  chapter. A violation of this section shall not be a misdemeanor.
    17    (d) Where the governor has declared a disaster emergency  pursuant  to
    18  section  twenty-eight  of the executive law, in addition to the right of
    19  action granted to the department pursuant to this  section,  any  person

    20  who  has  suffered  loss  or  injury  by reason of any violation of this
    21  section relating to  an  insurance  claim  for  property  damage  in  an
    22  affected  area encompassed by the executive order declaring the disaster
    23  emergency may bring an action in his or her own name as a  plaintiff  to
    24  enjoin such unlawful act or practice and an action to recover his or her
    25  actual  damages.  The  court  may,  in  its  discretion,  award punitive
    26  damages, if the court finds that  the  defendant  insurer  willfully  or
    27  knowingly  violated  this section. The court may award reasonable attor-
    28  ney's fees to a prevailing plaintiff.
    29    § 2. This act shall take effect immediately.
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