S T A T E   O F   N E W   Y O R K
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                                  8025

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                              June 4, 2015
                               ___________

Introduced  by  M.  of  A.  BRENNAN, COOK, ZEBROWSKI, ROSENTHAL, JAFFEE,
  GUNTHER, ROBINSON, KAVANAGH, HOOPER, COLTON -- Multi-Sponsored  by  --
  M.  of  A. BROOK-KRASNY, CAHILL, CUSICK, CYMBROWITZ, GOTTFRIED, TITONE
  -- 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 TIMELY 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;
  (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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01114-03-5

              

A. 8025                             2

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;
  (5)  FAILED  TO  ACT  IN GOOD FAITH BY COMPELLING THE POLICY HOLDER TO
INSTITUTE SUIT TO RECOVER AMOUNTS  DUE  UNDER  ITS  POLICY  BY  OFFERING
SUBSTANTIALLY LESS THAN THE AMOUNTS ULTIMATELY RECOVERED IN SUIT BROUGHT
BY SUCH POLICY HOLDER; OR
  (6)  FAILED  TO  PROMPTLY PROCEED WITH THE APPRAISAL PROCESS ONCE SUCH
HAS BEEN DEMANDED IN ANY CLAIM WHERE COVERAGE FOR A PORTION OF THE CLAIM
HAS BEEN ACCEPTED BY SUCH INSURER AND A DISAGREEMENT EXISTS BETWEEN  THE
INSURED AND THE INSURER WITH RESPECT TO THE VALUE OF COVERED PROPERTY OR
THE AMOUNT, OR EXTENT OF THE COVERED LOSS.
  (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, CONSEQUENTIAL 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 AS WELL AS PUNITIVE DAMAGES CAPPED
AT TWO TIMES THE VALUE OF THE COVERED LOSS ESTABLISHED AT TRIAL.
  (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.
  (1)  AS A CONDITION TO ANY RECOVERY PURSUANT TO SUBSECTION (A) OF THIS
SECTION, A CIVIL REMEDY NOTICE OF THE ALLEGED VIOLATION  MUST  BE  FILED
WITH  BOTH  THE  INSURER AND THE DEPARTMENT AT LEAST SIXTY DAYS PRIOR TO
COMMENCEMENT OF AN ACTION SEEKING RELIEF PURSUANT TO SUBSECTION  (A)  OF
THIS SECTION.
  (2)  THE CIVIL REMEDY NOTICE MUST BE ON A FORM APPROVED BY THE DEPART-
MENT AND INCLUDE THE  FOLLOWING  INFORMATION,  IF  SUCH  INFORMATION  IS
REASONABLY KNOWN TO THE INSURED:
  (A)  THE  STATUTORY  PROVISION, INCLUDING THE SPECIFIC LANGUAGE OF THE
STATUTE WHICH THE INSURER IS ALLEGED TO HAVE VIOLATED.
  (B) THE FACTS AND CIRCUMSTANCES GIVING RISE TO THE VIOLATION.
  (C) THE NAME OF ANY INDIVIDUAL INVOLVED IN THE VIOLATION.
  (D) REFERENCE TO SPECIFIC POLICY LANGUAGE  THAT  IS  RELEVANT  TO  THE
VIOLATION, IF ANY.
  (E) A STATEMENT THAT THE NOTICE IS GIVEN IN ORDER TO PROTECT THE RIGHT
TO PURSUE THE CIVIL REMEDY.
  (3)  THE  INSURER  WHO IS THE SUBJECT OF THE CIVIL REMEDY NOTICE SHALL
HAVE SIXTY DAYS FROM THE FILING OF  THE  REQUIRED  NOTICE  TO  CURE  THE
VIOLATION.    NO CIVIL ACTION UNDER THIS SECTION WILL BE SUSTAINABLE IF,
WITHIN SIXTY DAYS AFTER THE REQUIRED NOTICE FILING, THE  DAMAGES  SOUGHT
ARE PAID.
  (4) THE RIGHTS ENUMERATED HEREIN ARE NOT THE EXCLUSIVE REMEDIES AVAIL-
ABLE  TO  THE INSURED AND DO NOT PRECLUDE ANY COMMON LAW CLAIMS OR OTHER
STATUTORY CLAIMS THAT MAY EXIST.
  (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,  LOSS RESERVE AMOUNTS 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 POLICY AND FACILITATE ADMISSIBILITY OF  EVIDENCE  ON
THE CAUSES OF ACTION ASSERTED PURSUANT TO THIS SECTION.

A. 8025                             3

  (E)  ALL  AMOUNTS  RECOVERED FROM AN INSURER AS ACTUAL DAMAGES, CONSE-
QUENTIAL DAMAGES, REASONABLE ATTORNEYS' FEES AND PUNITIVE DAMAGES 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.