Bill Text: NY S03516 | 2021-2022 | General Assembly | Introduced
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 2-0)
Status: (Introduced - Dead) 2021-05-18 - RECOMMIT, ENACTING CLAUSE STRICKEN [S03516 Detail]
Download: New_York-2021-S03516-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 3516 2021-2022 Regular Sessions IN SENATE January 30, 2021 ___________ Introduced by Sens. BAILEY, SKOUFIS -- 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) 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; 22 (4) failed to make a final determination and notify the policyholder 23 in writing of its position on both liability for and the insurer's valu- 24 ation of a claim within six months of the date on which it received 25 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. LBD00340-01-1S. 3516 2 1 (5) failed to act in good faith by compelling a policyholder 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 policyholder; 5 (6) failed to advise a policyholder that a claim may exceed policy 6 limits, that counsel assigned by the insurer may be subject to a 7 conflict of interest, or that the policyholder may retain independent 8 counsel; 9 (7) failed to provide, on request of the policyholder or their repre- 10 sentative, all reports, letters or other documentation arising from the 11 investigation of a claim and evaluating liability for or valuation of 12 such claim; 13 (8) refused to pay a claim without conducting a reasonable investi- 14 gation; 15 (9) negotiated or settled a claim directly with a policyholder known 16 to be represented by an attorney without the attorney's knowledge or 17 consent. The provisions of this paragraph shall not be deemed to prohib- 18 it routine inquiries to a policyholder to obtain details concerning the 19 claim; 20 (10) failed to pay on one or more elements of a claim where a prepon- 21 derance of the evidence establishes the claim as to liability notwith- 22 standing the existence of disputes as to other elements of the claim 23 where such payment can be made without prejudice to either party; or 24 (11) acted in violation of section two thousand six hundred one of 25 this article or any regulation promulgated pursuant thereto. 26 (b) Any policyholder who establishes liability pursuant to subsection 27 (a) of this section shall be entitled to recover, in addition to amounts 28 due under the policy, interest, costs and disbursements, compensatory 29 damages, consequential damages, and reasonable attorneys' fees incurred 30 by the policyholder from the date of the loss, in recovering monies due 31 pursuant to the terms of the policy, as well as such additional punitive 32 damages as the court may allow. For purposes of this section, it shall 33 be presumed that consequential damages were within the contemplation of 34 the parties at the time of contracting. 35 (c) Any policyholder may recover damages from an insurer doing busi- 36 ness in this state pursuant to this section either as part of an action 37 to recover under the terms of an insurance policy or in a separate 38 action. 39 (d) In any trial of a cause of action asserted against an insurer 40 pursuant to this section, evidence of settlement discussions written and 41 verbal offers to compromise and other evidence relating to the claims 42 process shall be admissible. If causes of action relating to liability 43 of the insurer under the policy and under this section are alleged in 44 the same action, the court may bifurcate the trial of issues so as to 45 avoid prejudice to the insurer on the issue of liability under the poli- 46 cy and facilitate admissibility of evidence on the causes of action 47 asserted pursuant to this section. 48 (e) All amounts recovered from an insurer as damages and reasonable 49 attorneys' fees in any action authorized in this section shall be 50 excluded by the insurer in its determinations of the premiums it will 51 charge all policyholders on all policies issued by it. 52 (f) Nothing in this section shall be construed to limit a 53 policyholder's right to a trial by jury for any claims arising under 54 this section. 55 (g) An action may also be maintained by the persons identified in 56 paragraphs one, two and three of subsection (b) of section three thou-S. 3516 3 1 sand four hundred twenty of this chapter against an insurer to recover 2 damages including compensatory damages, punitive damages as the court 3 may allow, and interest measured from the time of failure to offer a 4 fair and reasonable settlement in accordance with this section, from 5 such insurer to the full extent of the judgment against the insured, not 6 limited to the policy limits and not subject to the limitations and 7 conditions of paragraph two of subsection (a) of section three thousand 8 four hundred twenty of this chapter, where a preponderance of the 9 evidence establishes that the insurer failed to effectuate a prompt and 10 fair settlement of a claim or any portion thereof, and where under the 11 totality of the facts and circumstances related to the claim, the insur- 12 er failed to reasonably accord at least equal or more favorable consid- 13 eration to its insured's interests as it did to its own interests, and 14 thereby exposed the insured to a judgment in excess of the policy 15 limits. 16 (h) The rights enumerated in this section are not the exclusive reme- 17 dies available to the policyholder and do not preclude any common law 18 claims or other statutory claims that may exist or rise. 19 § 2. Section 3425 of the insurance law is amended by adding a new 20 subsection (t) to read as follows: 21 (t) No insurer shall refuse to issue or renew a covered policy solely 22 on the ground that the policyholder has brought an action pursuant to 23 section two thousand six hundred one-a of this chapter. 24 § 3. Paragraph 4 of subsection (a) of section 2601 of the insurance 25 law, as amended by chapter 547 of the laws of 1997, is amended to read 26 as follows: 27 (4) [not attempting in good faith] where the insurer failed to effec- 28 tuate a prompt[,] and fair [and equitable settlements] settlement of 29 [claims submitted in which liability has become reasonably clear] a 30 claim or any portion thereof, and the insurer failed to reasonably 31 accord at least equal or more favorable consideration to its insured's 32 interests as it did to it own interests, and thereby exposed the insured 33 to a judgment in excess of the policy limits, except where there is a 34 reasonable basis supported by specific information available for review 35 by the department that the claimant has caused the loss to occur by 36 arson. After receiving a properly executed proof of loss, the insurer 37 shall advise the claimant of acceptance or denial of the claim within 38 thirty working days; 39 § 4. This act shall take effect on the first of January next succeed- 40 ing the date on which it shall have become a law, and shall apply to all 41 acts and omissions by insurers occurring on or after such effective 42 date.
