Bill Text: NY S05065 | 2009-2010 | General Assembly | Introduced

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Bill Title: Enacts provisions relating to unfair claim settlement practices; 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.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced - Dead) 2010-01-06 - REFERRED TO INSURANCE [S05065 Detail]

Download: New_York-2009-S05065-Introduced.html

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                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         5065
                              2009-2010 Regular Sessions
                                   I N  S E N A T E
                                    April 27, 2009
                                      ___________
       Introduced  by  Sen. SCHNEIDERMAN -- 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    S 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.
                                                                  LBD02831-03-9
       S. 5065                             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.
    5    (B) ANY POLICY HOLDER WHO ESTABLISHES LIABILITY PURSUANT TO SUBSECTION
    6  (A)  OF THIS SECTION AND THAT SUCH LIABILITY AROSE AS A RESULT OF INTEN-
    7  TIONAL, RECKLESS OR GROSSLY NEGLIGENT  CONDUCT  BY  THE  INSURER  OR  AN
    8  EXPRESS  OR IMPLIED POLICY OF THE INSURER FOR PROCESSING CLAIMS SHALL BE
    9  ENTITLED TO RECOVER PUNITIVE DAMAGES IN AN  AMOUNT  NOT  MORE  THAN  THE
   10  TOTAL AMOUNT RECOVERED IN THE ACTION.
   11    (C) ANY POLICY HOLDER WHO ESTABLISHES LIABILITY PURSUANT TO SUBSECTION
   12  (A) OF THIS SECTION SHALL BE ENTITLED TO RECOVER, IN ADDITION TO AMOUNTS
   13  DUE  UNDER  THE POLICY, INTEREST, COSTS, AND DISBURSEMENTS, COMPENSATORY
   14  DAMAGES AND REASONABLE ATTORNEYS' FEES INCURRED  BY  THE  POLICY  HOLDER
   15  FROM  THE  DATE  OF  THE  LOSS, IN RECOVERING MONIES DUE PURSUANT TO THE
   16  TERMS OF THE POLICY.
   17    (D) 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    (E)  IN  ANY  TRIAL  OF  A CAUSE OF ACTION ASSERTED AGAINST AN INSURER
   22  PURSUANT TO THIS SECTION, EVIDENCE OF SETTLEMENT DISCUSSIONS WRITTEN AND
   23  VERBAL, OFFERS TO COMPROMISE AND OTHER EVIDENCE RELATING TO  THE  CLAIMS
   24  PROCESS  SHALL  BE ADMISSIBLE. IF CAUSES OF ACTION RELATING TO LIABILITY
   25  OF THE INSURER UNDER THE POLICY AND UNDER THIS SECTION  ARE  ALLEGED  IN
   26  THE  SAME  ACTION,  THE COURT MAY BIFURCATE THE TRIAL OF ISSUES SO AS TO
   27  AVOID PREJUDICE TO THE INSURER ON THE ISSUE OF LIABILITY UNDER THE POLI-
   28  CY AND FACILITATE ADMISSIBILITY OF EVIDENCE  ON  THE  CAUSES  OF  ACTION
   29  ASSERTED PURSUANT TO THIS SECTION.
   30    (F)  ALL AMOUNTS RECOVERED FROM AN INSURER IN ANY ACTION AUTHORIZED IN
   31  THIS SECTION SHALL BE EXCLUDED BY THE INSURER IN ITS  DETERMINATIONS  OF
   32  THE PREMIUMS IT WILL CHARGE ALL POLICY HOLDERS ON ALL POLICIES ISSUED BY
   33  IT.
   34    S 2. This act shall take effect immediately.