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.
Law Section: Insurance Law
Law: Add S2601-a, Ins L
Multi-sponsor(s): Boyland, Brook-Krasny, Cahill, Cusick, Cymbrowitz, Gibson, Gottfried, Maisel, Millman, Pheffer, Sweeney, Titone, Towns, Weisenberg
Co-sponsor(s): Cook, Schroeder, Lancman, Zebrowski, Rosenthal, Jaffee, Kellner, Gunther, Robinson, Kavanagh, Hooper, Reilly, Colton, Scarborough, Stevenson, BarronCommittee: INSURANCE
Law Section: Insurance Law
Law: Add S2601-a, Ins L
- Jan 4, 2012: referred to insurance
- Feb 23, 2011: referred to insurance
S T A T E O F N E W Y O R K ________________________________________________________________________ 5589 2011-2012 Regular Sessions I N ASSEMBLY February 23, 2011 ___________ Introduced by M. of A. BRENNAN, COOK, SCHROEDER, LANCMAN, ZEBROWSKI, ROSENTHAL, JAFFEE, KELLNER, GUNTHER, ROBINSON, KAVANAGH, HOOPER, REIL- LY, COLTON, SCARBOROUGH, STEVENSON, BARRON -- Multi-Sponsored by -- M. of A. BOYLAND, BROOK-KRASNY, CAHILL, CUSICK, CYMBROWITZ, GOTTFRIED, MAISEL, MILLMAN, PHEFFER, SWEENEY, TITONE, TOWNS, WEISENBERG -- 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:
Section 1. The insurance law is amended by adding a new section 2601-a to read as follows:
S 2601-A. UNFAIR CLAIM SETTLEMENT PRACTICES; CIVIL REMEDY. (A) AN INSURER DOING BUSINESS IN THIS STATE SHALL BE LIABLE TO THE HOLDER OF A POLICY ISSUED OR RENEWED PURSUANT TO ARTICLE THIRTY-FOUR OF THIS CHAPTER FOR DAMAGES AS PROVIDED IN THIS SECTION UPON SUCH POLICY HOLDER PROVING BY A PREPONDERANCE OF THE EVIDENCE THAT SUCH INSURER'S REFUSAL TO PAY OR UNREASONABLE DELAY IN PAYMENT TO THE POLICY HOLDER OF AMOUNTS CLAIMED TO BE DUE UNDER A POLICY WAS NOT SUBSTANTIALLY JUSTIFIED. AN INSURER IS NOT SUBSTANTIALLY JUSTIFIED IN REFUSING TO PAY OR IN UNREASONABLY DELAY- ING PAYMENT WHEN THE INSURER:
(1) INTENTIONALLY, RECKLESSLY OR BY GROSS NEGLIGENCE FAILED TO PROVIDE THE POLICY HOLDER WITH ACCURATE INFORMATION CONCERNING POLICY PROVISIONS RELATING TO THE COVERAGE AT ISSUE; (2) FAILED TO EFFECTUATE IN GOOD FAITH A PROMPT, FAIR AND EQUITABLE SETTLEMENT OF A CLAIM SUBMITTED BY SUCH POLICY HOLDER IN WHICH LIABILITY OF SUCH INSURER TO SUCH POLICY HOLDER WAS REASONABLY CLEAR; (3) FAILED TO PROVIDE A WRITTEN DENIAL OF A POLICY HOLDER'S CLAIM WITH A FULL AND COMPLETE EXPLANATION OF SUCH DENIAL, INCLUDING REFERENCES TO SPECIFIC POLICY PROVISIONS WHEREVER POSSIBLE; EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD04130-02-1 A. 5589 2 (4) FAILED TO MAKE A FINAL DETERMINATION AND NOTIFY THE POLICY HOLDER IN WRITING OF ITS POSITION ON BOTH LIABILITY FOR, AND THE INSURER'S VALUATION OF, A CLAIM WITHIN SIX MONTHS OF THE DATE ON WHICH IT RECEIVED ACTUAL OR CONSTRUCTIVE NOTICE OF THE LOSS UPON WHICH THE CLAIM IS BASED; OR (5) FAILED TO ACT IN GOOD FAITH BY COMPELLING POLICY HOLDER TO INSTI- TUTE SUIT TO RECOVER AMOUNTS DUE UNDER ITS POLICY BY OFFERING SUBSTAN- TIALLY LESS THAN THE AMOUNTS ULTIMATELY RECOVERED IN SUIT BROUGHT BY SUCH POLICY HOLDER. (B) ANY POLICY HOLDER WHO ESTABLISHES LIABILITY PURSUANT TO SUBSECTION (A) OF THIS SECTION SHALL BE ENTITLED TO RECOVER, IN ADDITION TO AMOUNTS DUE UNDER THE POLICY, INTEREST, COSTS, AND DISBURSEMENTS, COMPENSATORY DAMAGES AND REASONABLE ATTORNEYS' FEES INCURRED BY THE POLICY HOLDER FROM THE DATE OF THE LOSS, IN RECOVERING MONIES DUE PURSUANT TO THE TERMS OF THE POLICY. (C) ANY POLICY HOLDER MAY RECOVER DAMAGES FROM AN INSURER DOING BUSI- NESS IN THIS STATE PURSUANT TO THIS SECTION EITHER AS PART OF AN ACTION TO RECOVER UNDER THE TERMS OF AN INSURANCE POLICY OR IN A SEPARATE ACTION. (D) IN ANY TRIAL OF A CAUSE OF ACTION ASSERTED AGAINST AN INSURER PURSUANT TO THIS SECTION, EVIDENCE OF SETTLEMENT DISCUSSIONS WRITTEN AND VERBAL OFFERS TO COMPROMISE AND OTHER EVIDENCE RELATING TO THE CLAIMS PROCESS SHALL BE ADMISSIBLE. IF CAUSES OF ACTION RELATING TO LIABILITY OF THE INSURER UNDER THE POLICY AND UNDER THIS SECTION ARE ALLEGED IN THE SAME ACTION, THE COURT MAY BIFURCATE THE TRIAL OF ISSUES SO AS TO AVOID PREJUDICE TO THE INSURER ON THE ISSUE OF LIABILITY UNDER THE POLI- CY AND FACILITATE ADMISSIBILITY OF EVIDENCE ON THE CAUSES OF ACTION ASSERTED PURSUANT TO THIS SECTION. (E) ALL AMOUNTS RECOVERED FROM AN INSURER AS ACTUAL DAMAGES AND REASONABLE ATTORNEYS' FEES IN ANY ACTION AUTHORIZED IN THIS SECTION SHALL BE EXCLUDED BY THE INSURER IN ITS DETERMINATIONS OF THE PREMIUMS IT WILL CHARGE ALL POLICY HOLDERS ON ALL POLICIES ISSUED BY IT. S 2. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law, and shall apply to all acts and omissions by insurers occurring on or after such effective date.