Bill Text: NY A05623 | 2019-2020 | General Assembly | Amended

Bill Title: 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.

Spectrum: Partisan Bill (Democrat 20-0)

Status: (Introduced) 2019-05-17 - print number 5623a [A05623 Detail]

Download: New_York-2019-A05623-Amended.html

                STATE OF NEW YORK


                               2019-2020 Regular Sessions

                   IN ASSEMBLY

                                    February 14, 2019

        Introduced  by  M.  of  A. WEINSTEIN, CUSICK, TITUS, CYMBROWITZ, JAFFEE,
          TAYLOR -- read once and referred to  the  Committee  on  Insurance  --
          committee  discharged,  bill amended, ordered reprinted as amended and
          recommitted to said committee

        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;
    19    (3) failed to provide a timely  written  denial  of  a  policyholder's
    20  claim  with  a  full  and complete explanation of such denial, including
    21  references to specific policy provisions wherever possible;

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

        A. 5623--A                          2

     1    (4) failed to make a final determination and notify  the  policyholder
     2  in writing of its position on both liability for and the insurer's valu-
     3  ation  of  a  claim  within  six months of the date on which it received
     4  actual or constructive notice of the loss upon which the claim is based;
     5    (5) failed to act in good faith by compelling a policyholder to insti-
     6  tute  suit  to recover amounts due under its policy by offering substan-
     7  tially less than the amounts ultimately recovered  in  suit  brought  by
     8  such policyholder;
     9    (6)  failed  to  advise  a policyholder that a claim may exceed policy
    10  limits, that counsel assigned  by  the  insurer  may  be  subject  to  a
    11  conflict  of  interest,  or that the policyholder may retain independent
    12  counsel;
    13    (7) failed to provide, on request of the policyholder or their  repre-
    14  sentative,  all reports, letters or other documentation arising from the
    15  investigation of a claim and evaluating liability for  or  valuation  of
    16  such claim;
    17    (8)  refused  to  pay a claim without conducting a reasonable investi-
    18  gation;
    19    (9) negotiated or settled a claim directly with a  policyholder  known
    20  to  be  represented  by  an attorney without the attorney's knowledge or
    21  consent. The provisions of this paragraph shall not be deemed to prohib-
    22  it routine inquiries to a policyholder to obtain details concerning  the
    23  claim;
    24    (10)  failed to pay on one or more elements of a claim where a prepon-
    25  derance of the evidence establishes the claim as to  liability  notwith-
    26  standing  the  existence  of  disputes as to other elements of the claim
    27  where such payment can be made without prejudice to either party; or
    28    (11) acted in violation of section two thousand  six  hundred  one  of
    29  this article or any regulation promulgated pursuant thereto.
    30    (b)  Any policyholder who establishes liability pursuant to subsection
    31  (a) of this section shall be entitled to recover, in addition to amounts
    32  due under the policy, interest, costs  and  disbursements,  compensatory
    33  damages,  consequential damages, and reasonable attorneys' fees incurred
    34  by the policyholder from the date of the loss, in recovering monies  due
    35  pursuant to the terms of the policy, as well as such additional punitive
    36  damages  as the court may allow.  For purposes of this section, it shall
    37  be presumed that consequential damages were within the contemplation  of
    38  the parties at the time of contracting.
    39    (c)  Any  policyholder may recover damages from an insurer doing busi-
    40  ness in this state pursuant to this section either as part of an  action
    41  to  recover  under  the  terms  of  an insurance policy or in a separate
    42  action.
    43    (d) In any trial of a cause of  action  asserted  against  an  insurer
    44  pursuant to this section, evidence of settlement discussions written and
    45  verbal  offers  to  compromise and other evidence relating to the claims
    46  process shall be admissible. If causes of action relating  to  liability
    47  of  the  insurer  under the policy and under this section are alleged in
    48  the same action, the court may bifurcate the trial of issues  so  as  to
    49  avoid prejudice to the insurer on the issue of liability under the poli-
    50  cy  and  facilitate  admissibility  of  evidence on the causes of action
    51  asserted pursuant to this section.
    52    (e) All amounts recovered from an insurer as  damages  and  reasonable
    53  attorneys'  fees  in  any  action  authorized  in  this section shall be
    54  excluded by the insurer in its determinations of the  premiums  it  will
    55  charge all policyholders on all policies issued by it.

        A. 5623--A                          3

     1    (f)   Nothing   in   this  section  shall  be  construed  to  limit  a
     2  policyholder's right to a trial by jury for  any  claims  arising  under
     3  this section.
     4    (g)  An  action  may  also  be maintained by the persons identified in
     5  paragraphs one, two and three of subsection (b) of section  three  thou-
     6  sand  four  hundred twenty of this chapter against an insurer to recover
     7  damages including punitive damages as the court may allow, and  interest
     8  measured  from  the  time of failure to offer a reasonable settlement in
     9  accordance with this section, from such insurer to the  full  extent  of
    10  the  judgment  against the insured, not limited to the policy limits and
    11  not subject to the  limitations  and  conditions  of  paragraph  two  of
    12  subsection  (a)  of  section  three thousand four hundred twenty of this
    13  chapter, where a preponderance of  the  evidence  establishes  that  the
    14  insurer  failed to effectuate a prompt and fair settlement of a claim or
    15  any portion thereof, and where under  the  totality  of  the  facts  and
    16  circumstances  related  to  the  claim, the insurer failed to reasonably
    17  accord at least equal or more favorable consideration to  its  insured's
    18  interests  as  it  did  to  its  own  interests, and thereby exposed the
    19  insured to a judgment in excess of the policy limits.
    20    (h) The rights enumerated in this section are not the exclusive  reme-
    21  dies  available  to  the policyholder and do not preclude any common law
    22  claims or other statutory claims that may exist or rise.
    23    § 2. Section 3425 of the insurance law is  amended  by  adding  a  new
    24  subsection (t) to read as follows:
    25    (t)  No insurer shall refuse to issue or renew a covered policy solely
    26  on the ground that the policyholder has brought an  action  pursuant  to
    27  section two thousand six hundred one-a of this chapter.
    28    §  3.  Paragraph  4 of subsection (a) of section 2601 of the insurance
    29  law, as amended by chapter 547 of the laws of 1997, is amended  to  read
    30  as follows:
    31    (4)  [not attempting in good faith] where the insurer failed to effec-
    32  tuate a prompt[,] and fair [and  equitable  settlements]  settlement  of
    33  [claims  submitted  in  which  liability  has become reasonably clear] a
    34  claim or any portion thereof,  and  the  insurer  failed  to  reasonably
    35  accord  at  least equal or more favorable consideration to its insured's
    36  interests as it did to it own interests, and thereby exposed the insured
    37  to a judgment in excess of the policy limits, except where  there  is  a
    38  reasonable  basis supported by specific information available for review
    39  by the department that the claimant has caused  the  loss  to  occur  by
    40  arson.  After  receiving  a properly executed proof of loss, the insurer
    41  shall advise the claimant of acceptance or denial of  the  claim  within
    42  thirty working days;
    43    §  4. This act shall take effect on the first of January next succeed-
    44  ing the date on which it shall have become a law, and shall apply to all
    45  acts and omissions by insurers occurring  on  or  after  such  effective
    46  date.