S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2822
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 25, 2019
                                ___________
 
 Introduced  by  M.  of  A.  BICHOTTE, ZEBROWSKI, JAFFEE, ORTIZ, GUNTHER,
   SEAWRIGHT, COOK, COLTON, L. ROSENTHAL, RICHARDSON  --  Multi-Sponsored
   by -- M. of A.  CUSICK, CYMBROWITZ, D'URSO, GOTTFRIED -- 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:
   §  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.
                                                            LBD00221-01-9
              

 A. 2822                             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. 2822                             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.
   §  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.