Bill Text: NY A01119 | 2023-2024 | General Assembly | Introduced

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Bill Title: 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.

Spectrum: Partisan Bill (Democrat 8-0)

Status: (Introduced) 2024-01-03 - referred to insurance [A01119 Detail]

Download: New_York-2023-A01119-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          1119

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                    January 13, 2023
                                       ___________

        Introduced  by  M.  of  A.  BICHOTTE HERMELYN,  COOK,  COLTON,  GUNTHER,
          SEAWRIGHT, L. ROSENTHAL, ZEBROWSKI -- read once and  referred  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 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.
                                                                   LBD01189-01-3
        A. 1119                             2

     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
        A. 1119                             3

     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.