NY State Senate Bill 2015-S4049B

Senate Bill S4049B

2015-2016 Legislative Session

Establishes a civil private cause of action by a policyholder who has suffered unfair claim settlement practices by a property and casualty insurer

download bill text pdf

Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2016	referred to insurance
Jun 25, 2015	recommitted to rules ordered to third reading cal.1885 committee discharged and committed to rules
Jun 14, 2015	print number 4049b
Jun 14, 2015	amend and recommit to insurance
Jun 05, 2015	print number 4049a
Jun 05, 2015	amend and recommit to insurance
Feb 26, 2015	referred to insurance

Votes

- Jun 25, 2015 - Rules Committee Vote
  S4049B
  
  16
  
  Aye
  
  5
  
  Nay
  
  2
  
  Aye with Reservations
  
  1
  
  Absent
  
  1
  
  Excused
  
  0
  
  Abstained
  - - Rules Committee Vote: Jun 25, 2015
      
      aye (16)
      
      Bonacic
      
      Carlucci
      
      DeFrancisco
      
      Dilan
      
      Espaillat
      
      Flanagan
      
      Hassell-Thompson
      
      Krueger
      
      LaValle
      
      Larkin
      
      Marcellino
      
      Montgomery
      
      Nozzolio
      
      Skelos
      
      Stewart-Cousins
      
      Valesky
      
      nay (5)
      
      Breslin
      
      Farley
      
      Hannon
      
      Seward
      
      Young
      
      aye wr (2)
      
      Gianaris
      
      Little
      
      absent (1)
      
      Parker
      
      excused (1)
      
      Perkins

Bill Amendments

Original

B (Active)

2015-S4049 - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §2601-a, Ins L
Versions Introduced in 2013-2014 Legislative Session:: S5664

2015-S4049 - Summary

Establishes a civil private cause of action by a policyholder who has suffered unfair claim settlement practices by an insurer.

2015-S4049 - Sponsor Memo

                                BILL NUMBER:S4049

TITLE OF BILL:  An act to amend the insurance law, in relation to unfair
claim settlement practices

PURPOSE:    To allow insurance policy holders to recover-damages when an
insurance company's refusal to pay or unreasonable  delay  in  paying  a
claim was not substantially justified.

SUMMARY  OF  PROVISIONS:    This  bill grants insurance policy holders a
private right of action to seek damages if  their  insurer  unreasonably
refuses to pay or unreasonably delays payment without Substantial justi-
fication.    An insurer would not be substantially justified in refusing
to pay or in unreasonably delaying payment when they

1. Fail to provide the policy holder with accurate information  concern-
ing policy provision relating to the coverage et issue; or

2.  Fail  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; or

3. Fail 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; or

4. Fail to make a final determination and notify the  policy  holder  in
writing  of  its  position  on both the 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. Fail to act in good faith by compelling the policy holder to initiate
a lawsuit to recover under the policy  by  offering  substantially  less
than the amounts ultimately recovered in the suit by the policy holder,

6. Fail to advise a policy holder chat a claim may exceed policy limits,
that  assigned counsel may be subject to a conflict of interest, or that
the policy holder may retain independent counsel;

7. Fail to provide, no request of the policy holder, reporters or  other
documentation arising from the investigation of a claim;

8. Failing to pay a claim without conducting a reasonable investigation;

9.  Negotiating  or settling a claim directly with a policy holder known
to be represented by an attorney without the attorneys knowledge;

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 payment can be made without  prejudice
to either party;

11. Acted in violation of Sec, 2601 of the Insurance law.

Any  policy  holder  who  establishes  liability  shall  be  entitled to
recover, in addition to amounts due under the policy,  interest,  costs,
and  disbursements, compensatory damages equal to three times the actual
damages, reasonable attorney fees, and punitive damages where violations
of this section are part of a general business practice.

The bill also includes procedural  rules  to  insure  that  the  insurer
receives  a  fair trial on the issue of liability under the terms of the
policy before the issue of substantial justification is considered.

Finally, in the event an insurer is found liable under this section, the
bill would prevent insurers from passing on the costs  to  consumers  in
the form of higher premiums.

JUSTIFICATION:    Insurance  companies have an overwhelming advantage in
the handling of a claim, with the power and financial incentive to  deny
or delay coverage and otherwise avoid fair payment of legitimate claims.
Under  current law, there is no consequence to the insurer when a denial
or delay of coverage is unfounded, or when the insurer offers an  unrea-
sonably  low settlement. The importance of this issue is becoming appar-
ent as an increasing number of the tens  of  thousands  of  New  Yorkers
making  claims  in  the  aftermath  of  Hurricane Sandy are experiencing
unfair claims practices.

Currently Section 2601 of the insurance law  regulates  the  conduct  of
insurers,  prohibiting  5 specific actions that constitute unfair claims
practices. However, only the Superintendent of the Department of  Finan-
cial  Services can enforce these provisions. Furthermore, Sec. 2601 does
not go far enough in regulating the types of unfair claims practices  we
have seen across the state in the wake of recent natural disasters.

Under  existing  statutes  and case law, an insurer can simply refuse to
pay a claim or offer an amount well below the value  of  the  loss  with
impunity, Even if the policy holder sues and wins the full amount of the
claim,  they  will  still  not  receive the benefits they paid for under
their policy because of the costs associated with bringing the  success-
ful  action.  This  gives  insurers an unfair advantage in negotiating a
settlement of any claim - insurers are able to bear the costs  of  liti-
gation, but most ordinary New Yorkers cannot afford to do so.

New Yorkers who pay insurance premiums should expect insurers to live up
to  their  obligation  to  deal in good faith with their policy holders.
When insurers do not meet this  obligation  it  is  important  that  the
consumer  has a viable and effective means of seeking redress. This bill
gives them the legal means to achieve this goal,

LEGISLATIVE HISTORY:  2014: S5664 Referred to  Insurance/A7809  Referred
to Rules.

FISCAL IMPLICATIONS:  None.

EFFECTIVE  DATE:  January 1st next succeeding the date on which it shall
have become a law.

2015-S4049 - Bill Text download pdf

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

                                  4049

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            February 26, 2015
                               ___________

Introduced  by  Sen.  LANZA  -- 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 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-
TIALLY  LESS  THAN  THE  AMOUNTS ULTIMATELY RECOVERED IN SUIT BROUGHT BY
SUCH POLICYHOLDER;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD00077-01-5

S. 4049                             2

  (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. THE PROVISIONS OF THIS PARAGRAPH SHALL NOT BE DEEMED TO PROHIB-
IT  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.

2015-S4049A - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §2601-a, Ins L
Versions Introduced in 2013-2014 Legislative Session:: S5664

2015-S4049A - Summary

Establishes a civil private cause of action by a policyholder who has suffered unfair claim settlement practices by an insurer.

2015-S4049A - Sponsor Memo

                                BILL NUMBER:S4049A

TITLE OF BILL:  An act to amend the insurance law, in relation to
unfair claim settlement practices

PURPOSE OF BILL:  To allow insurance policy holders to recover-damages
when an insurance company's refusal to pay or unreasonable delay in
paying a claim was not substantially justified.

SUMMARY OF PROVISIONS OF BILL: This bill grants insurance policy
holders a private right of action to seek damages if their insurer
unreasonably refuses to pay or unreasonably delays payment without
substantial justification.  An insurer would not be substantially
justified in refusing to pay or in unreasonably delaying payment when
they:

1. Fail to provide the policy holder with accurate information
concerning policy provisions relating to the coverage at issue; or

2. Fail to effectuate, in good faith, a prompt, fair and equitable
settlement of a claim submitted by such policy holder in which the
liability of such insurer to such policy holder was reasonably clear;
or

3. Fail 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; or

4. Fail to make a final determination and notify the policy holder in
writing of its position on both the 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. Fail to act in good faith by compelling the policy holder to
initiate a lawsuit to recover under the policy by offering
substantially less than the amounts ultimately recovered in the suit
by the policy holder; or

6. Fail to advise a policy holder that a claim may exceed policy
limits, that assigned counsel may be subject to a conflict of
interest, or that the policy holder may retain independent counsel; or

7. Fail to provide, on request of the policy holder or their
representative, all reports or other documentation arising from the
investigation of a claim; or

8. Failing to pay a claim without conducting a reasonable
investigation; or

9. Negotiating or settling a claim directly with a policy holder known
to be represented by an attorney without the attorney's knowledge;

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 payment can be made without
prejudice to either party; or


11. Acted in violation of § 2601 of the Insurance law or any related
regulation.

Any policyholder who establishes liability shall be entitled to
recover, in addition to amounts due under the policy, interest, costs,
and disbursements, compensatory damages" reasonable attorney fees, and
punitive damages where violations of this section were found to be
part of a general business practice.

The bill also includes procedural rules to insure that the insurer
receives a fair trial on the issue of liability under the terms of the
policy before the issue of substantial justification is considered.

Finally, in the event an insurer is found liable under this section,
the bill would prevent insurers from passing on the costs to consumers
in the form of higher premiums.

JUSTIFICATION:  Insurance companies have an overwhelming advantage in
the handling of a claim, with the power and financial incentive to
deny or delay coverage and otherwise avoid fair payment of legitimate
claims. Under current law, there is no consequence to the insurer when
a denial or delay of coverage is unfounded, or when the insurer offers
an unreasonably low settlement. The importance of this issue is
becoming apparent as an increasing number of the tens of thousands of
New Yorkers making claims in the aftermath of Super Storm Sandy are
experiencing unfair claims practices.

Currently § 2601 of the insurance law regulates the conduct of
insurers, prohibiting 5 specific actions that constitute unfair claims
practices. However, only the Superintendent of the Department of
Financial Services can enforce these provisions. Furthermore, § 2601
does not go far enough in regulating the types of unfair claims
practices we have seen across the state in the wake of recent natural
disasters.

Under existing statutes and case law, an insurer can simply refuse to
pay a claim with impunity or offer an amount well below the value of
the loss. Even if the policy holder sues and wins the full amount of
the claim, they will still not receive the benefits they paid for
under their policy because of the costs associated with bringing the
successful action. This gives insurers an unfair advantage in
negotiating a settlement of any claim - insurers are able to bear the
costs of litigation, but most ordinary New Yorkers cannot afford to do
so.

New Yorkers who pay insurance premiums should expect insurers to live
up to their obligation to deal in good faith with their policy
holders. When insurers do not meet this obligation it is important
that the consumer has a viable and effective means of seeking redress.
This bill gives consumers the legal means to achieve this goal.

LEGISLATIVE HISTORY:  2014: A.7809/S.5664 - A.Cal/S.Ins. 2013:
A.7809/S.5664 - A.Ins/S.Ins.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:  None.


EFFECTIVE DATE:  January 1st next succeeding the date on which it
shall have become a law.

2015-S4049A - Bill Text download pdf

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

                                 4049--A

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            February 26, 2015
                               ___________

Introduced  by  Sen.  LANZA  -- read twice and ordered printed, and when
  printed to be committed to the Committee  on  Insurance  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

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.
                                                           LBD00077-03-5

S. 4049--A                          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. THE PROVISIONS OF THIS PARAGRAPH SHALL NOT BE DEEMED TO PROHIB-
IT 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,  COMPENSATORY
DAMAGES,  AND  REASONABLE  ATTORNEYS'  FEES INCURRED BY THE POLICYHOLDER
FROM THE DATE OF THE LOSS, IN RECOVERING  MONIES  DUE  PURSUANT  TO  THE
TERMS  OF THE POLICY, AS WELL AS 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.
  (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.

co-Sponsors

View additional co-sponsors

2015-S4049B (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §2601-a, Ins L
Versions Introduced in 2013-2014 Legislative Session:: S5664

2015-S4049B (ACTIVE) - Summary

Establishes a civil private cause of action by a policyholder who has suffered unfair claim settlement practices by an insurer.

2015-S4049B (ACTIVE) - Bill Text download pdf

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

                                 4049--B

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            February 26, 2015
                               ___________

Introduced  by  Sen.  LANZA  -- read twice and ordered printed, and when
  printed to be committed to the Committee  on  Insurance  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to  said  committee  --  committee  discharged,  bill amended, ordered
  reprinted as amended and recommitted to said committee

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 ARTICLE THIRTY-FOUR OF
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 UNREASONABLY 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-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00077-04-5

S. 4049--B                          2

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-
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. THE PROVISIONS OF THIS PARAGRAPH SHALL NOT BE DEEMED TO PROHIB-
IT 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,  COMPENSATORY
DAMAGES,  AND  REASONABLE  ATTORNEYS'  FEES INCURRED BY THE POLICYHOLDER
FROM THE DATE OF THE LOSS, IN RECOVERING  MONIES  DUE  PURSUANT  TO  THE
TERMS  OF THE POLICY, AS WELL AS 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.
  (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. 4049--B                          3

  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.

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Senate Bill S4049B

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Sponsored By

Archive: Last Bill Status - In Senate Committee Insurance Committee

Bill Amendments

2015-S4049 - Details

2015-S4049 - Summary

2015-S4049 - Sponsor Memo

2015-S4049 - Bill Text download pdf

2015-S4049A - Details

2015-S4049A - Summary

2015-S4049A - Sponsor Memo

2015-S4049A - Bill Text download pdf

co-Sponsors

2015-S4049B (ACTIVE) - Details

2015-S4049B (ACTIVE) - Summary

2015-S4049B (ACTIVE) - Bill Text download pdf

Comments