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 and failure to make final determination of claim within six months.
STATE OF NEW YORK
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4735
2011-2012 Regular Sessions
IN SENATE
April 18, 2011
___________
Introduced by Sen. DeFRANCISCO -- read twice and ordered printed, and
when printed to be committed to the Committee 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 written denial of a policy holder's claim with
19 a full and complete explanation of such denial, including references to
20 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;
25 or
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10912-01-1
S. 4735 2
1 (5) failed to act in good faith by compelling policy holder to insti-
2 tute suit to recover amounts due under its policy by offering substan-
3 tially less than the amounts ultimately recovered in suit brought by
4 such policy holder.
5 (b) Any policy holder who establishes liability pursuant to subsection
6 (a) of this section shall be entitled to recover, in addition to amounts
7 due under the policy, interest, costs, and disbursements, compensatory
8 damages and reasonable attorneys' fees incurred by the policy holder
9 from the date of the loss, in recovering monies due pursuant to the
10 terms of the policy.
11 (c) Any policy holder may recover damages from an insurer doing busi-
12 ness in this state pursuant to this section either as part of an action
13 to recover under the terms of an insurance policy or in a separate
14 action.
15 (d) In any trial of a cause of action asserted against an insurer
16 pursuant to this section, evidence of settlement discussions written and
17 verbal offers to compromise and other evidence relating to the claims
18 process shall be admissible. If causes of action relating to liability
19 of the insurer under the policy and under this section are alleged in
20 the same action, the court may bifurcate the trial of issues so as to
21 avoid prejudice to the insurer on the issue of liability under the poli-
22 cy and facilitate admissibility of evidence on the causes of action
23 asserted pursuant to this section.
24 (e) All amounts recovered from an insurer as actual damages and
25 reasonable attorneys' fees in any action authorized in this section
26 shall be excluded by the insurer in its determinations of the premiums
27 it will charge all policy holders on all policies issued by it.
28 § 2. This act shall take effect on the first of January next succeed-
29 ing the date on which it shall have become a law, and shall apply to all
30 acts and omissions by insurers occurring on or after such effective
31 date.
