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

                                  7809

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                              June 5, 2013
                               ___________

Introduced  by  M.  of  A.  WEINSTEIN  --  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)  THE
HOLDER OF A POLICY ISSUED OR RENEWED PURSUANT TO THIS CHAPTER SHALL HAVE
A  PRIVATE  RIGHT  OF  ACTION AGAINST ANY INSURER DOING BUSINESS IN THIS
STATE FOR DAMAGES AS PROVIDED IN THIS  SECTION  UPON  SUCH  POLICYHOLDER
PROVING  BY  A PREPONDERANCE OF THE EVIDENCE THAT SUCH INSURER'S REFUSAL
TO PAY OR UNREASONABLE DELAY IN PAYMENT TO THE POLICYHOLDER  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  UNREA-
SONABLY DELAYING PAYMENT WHEN THE INSURER:
  (1)  FAILED  TO  PROVIDE  THE  POLICYHOLDER  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 POLICYHOLDER IN WHICH LIABILITY
OF SUCH INSURER TO SUCH POLICYHOLDER WAS REASONABLY CLEAR;
  (3) FAILED TO PROVIDE A WRITTEN DENIAL OF A POLICYHOLDER'S CLAIM  WITH
A  FULL AND COMPLETE EXPLANATION OF SUCH DENIAL, INCLUDING REFERENCES TO
SPECIFIC POLICY PROVISIONS WHEREVER POSSIBLE;
  (4) FAILED TO MAKE A FINAL DETERMINATION AND NOTIFY  THE  POLICYHOLDER
IN WRITING OF ITS POSITION ON BOTH LIABILITY FOR AND THE INSURER'S VALU-
ATION  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;
  (5) FAILED TO ACT IN GOOD FAITH BY COMPELLING A POLICYHOLDER TO INSTI-
TUTE SUIT TO RECOVER AMOUNTS DUE UNDER ITS POLICY BY  OFFERING  SUBSTAN-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11339-01-3
              

A. 7809                             2

TIALLY  LESS  THAN  THE  AMOUNTS ULTIMATELY RECOVERED IN SUIT BROUGHT BY
SUCH POLICYHOLDER;
  (6)  FAILED  TO  ADVISE  A POLICYHOLDER THAT A CLAIM MAY EXCEED POLICY
LIMITS, THAT COUNSEL ASSIGNED  BY  THE  INSURER  MAY  BE  SUBJECT  TO  A
CONFLICT  OF  INTEREST,  OR THAT THE POLICYHOLDER MAY RETAIN INDEPENDENT
COUNSEL;
  (7) FAILED TO PROVIDE, ON REQUEST OF THE POLICYHOLDER OR THEIR  REPRE-
SENTATIVE,  ALL REPORTS, LETTERS OR OTHER DOCUMENTATION ARISING FROM THE
INVESTIGATION OF A CLAIM AND EVALUATING LIABILITY FOR  OR  VALUATION  OF
SUCH CLAIM;
  (8)  REFUSED  TO  PAY A CLAIM WITHOUT CONDUCTING A REASONABLE INVESTI-
GATION;
  (9) NEGOTIATED OR SETTLED A CLAIM DIRECTLY WITH A  POLICYHOLDER  KNOWN
TO  BE  REPRESENTED  BY  AN ATTORNEY WITHOUT THE ATTORNEY'S KNOWLEDGE OR
CONSENT. THIS SHALL NOT PROHIBIT ROUTINE INQUIRIES TO A POLICYHOLDER  TO
OBTAIN DETAILS CONCERNING THE CLAIM;
  (10)  FAILED  TO PAY ON ONE OR MORE ELEMENTS OF A CLAIM WHERE THERE IS
NO DISPUTE AS TO LIABILITY NOTWITHSTANDING THE EXISTENCE OF DISPUTES  AS
TO  OTHER  ELEMENTS  OF THE CLAIM WHERE SUCH PAYMENT CAN BE MADE WITHOUT
PREJUDICE TO EITHER PARTY; OR
  (11) ACTED IN VIOLATION OF SECTION TWO THOUSAND  SIX  HUNDRED  ONE  OF
THIS ARTICLE OR ANY REGULATION PROMULGATED PURSUANT THERETO.
  (B)  ANY POLICYHOLDER 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:
  (1) COMPENSATORY DAMAGES EQUAL TO THREE TIMES THE ACTUAL DAMAGES;
  (2) SUCH ADDITIONAL PUNITIVE DAMAGES AS THE  COURT  MAY  ALLOW,  ON  A
SHOWING THAT THE ACTS GIVING RISE TO LIABILITY OCCUR WITH SUCH FREQUENCY
AS TO INDICATE A GENERAL BUSINESS PRACTICE; AND
  (3)  REASONABLE  ATTORNEYS' FEES INCURRED BY THE POLICYHOLDER FROM THE
DATE OF THE LOSS, IN RECOVERING MONIES DUE PURSUANT TO THE TERMS OF  THE
POLICY.
  (C)  ANY  POLICYHOLDER 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  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 POLICYHOLDERS ON ALL POLICIES ISSUED BY IT.
  (F)   NOTHING   IN   THIS  SECTION  SHALL  BE  CONSTRUED  TO  LIMIT  A
POLICYHOLDER'S RIGHT TO A TRIAL BY JURY FOR  ANY  CLAIMS  ARISING  UNDER
THIS SECTION.
  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.