S T A T E   O F   N E W   Y O R K
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                                  6709

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                             March 11, 2009
                               ___________

Introduced  by  M.  of  A. BRENNAN, COOK, SCHROEDER, LANCMAN, ZEBROWSKI,
  ROSENTHAL, JAFFEE, FIELDS, KELLNER, GUNTHER, JOHN, ROBINSON, KAVANAGH,
  HOOPER, REILLY -- Multi-Sponsored by -- M. of A. BOYLAND,  BROOK-KRAS-
  NY,  CAHILL,  CUSICK,  GOTTFRIED, HYER-SPENCER, KOON, 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.
                                                           LBD02831-02-9

              

A. 6709                             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.