S1686-2011 Actions

• Jan 4, 2012: REFERRED TO INSURANCE
• Jan 11, 2011: REFERRED TO INSURANCE

S1686-2011 Memo

BILL NUMBER:S1686

TITLE OF BILL:
An act
to amend the insurance law, in relation to payment of interest penalty
and attorney fees to a claimant when a claim is overdue and the ability
of an insurer to assert a defense or deny a claim if timely payment is
not made within thirty days after proof of claim has been submitted

PURPOSE:
This bill would amend the insurance law law and would allow
insurers additional time to investigate potentially fraudulent
no-fault automobile insurance claims.

SUMMARY OF PROVISIONS:
Section 1 amends subsection (a) of section 5106
of the insurance law to include "payment of the interest and
reasonable attorney fees to a claimant when payment of a claim is
overdue shall be the exclusive remedy when an insurer fails to make
timely payment. The failure of an insurer to make timely payment or
issue a denial within thirty days after proof of claim has been
submitted to an insurer shall not preclude such insurer from issuing
a denial or asserting a defense after the thirty day period has
elapsed."

Section 2 of this bill states that this act shall take effect sixty
days after it shall become a law.

JUSTIFICATION:
This bill will help to reduce no fault insurance fraud
thereby reducing premiums paid by consumers. This legislation
clarifies the exclusive penalty for an overdue payment to be interest
and reasonable attorney fees. Additionally, the legislation permits
the insurer to issue a denial after the thirty days and assert a
defense after the thirty day period. Often times in cases of fraud
the investigation takes longer than thirty days and requires
additional time to determine the appropriate course of action.

LEGISLATIVE HISTORY:
S.6448 of 2010; S.2638 of 2007-08

FISCAL IMPLICATIONS:
Minimal.

EFFECTIVE DATE:
This act shall take effect sixty days after it shall
become a law.

S1686-2011 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         1686
 2011-2012 Regular Sessions
 I N  SENATE
 January 11, 2011
 
 Introduced  by  Sen.  SEWARD -- 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  payment  of  interest
 penalty  and  attorney  fees to a claimant when a claim is overdue and
 the ability of an insurer to assert a defense or deny a claim if time
 ly payment is not made within thirty days after  proof  of  claim  has
 been submitted
 

THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section 1. Subsection (a) of section 5106  of  the  insurance  law  is
 amended to read as follows:

 (a)  Payments of first party benefits and additional first party bene
 fits shall be made as the loss is incurred. Such benefits are overdue if
 not paid within thirty days after the claimant  supplies  proof  of  the
 fact  and  amount  of loss sustained. If proof is not supplied as to the
 entire claim, the amount which is supported by proof is overdue  if  not
 paid  within  thirty  days  after  such  proof  is supplied. All overdue
 payments shall bear interest at the rate of two percent per month. If  a
 valid  claim or portion was overdue, the claimant shall also be entitled
 to recover his  attorney's  reasonable  fee,  for  services  necessarily
 performed  in  connection  with  securing  payment of the overdue claim,
 subject to limitations promulgated by the superintendent in regulations.
 PAYMENT OF THE INTEREST PENALTY AND REASONABLE ATTORNEY FEES TO A CLAIM
 ANT WHEN PAYMENT OF A CLAIM IS OVERDUE SHALL  BE  THE  EXCLUSIVE  REMEDY
 WHEN  AN INSURER FAILS TO MAKE TIMELY PAYMENT. THE FAILURE OF AN INSURER
 TO MAKE TIMELY PAYMENT OR ISSUE A DENIAL WITHIN THIRTY DAYS AFTER  PROOF
 OF CLAIM HAS BEEN SUBMITTED TO AN INSURER SHALL NOT PRECLUDE SUCH INSUR
 ER  FROM  ISSUING  A  DENIAL OR ASSERTING A DEFENSE AFTER THE THIRTY DAY
 PERIOD HAS ELAPSED.
 

S 2. This act shall take effect on the sixtieth  day  after  it  shall
 have become a law.
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD05836-01-1

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