S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5623
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 14, 2019
                                ___________
 
 Introduced  by  M.  of  A. WEINSTEIN, CUSICK, TITUS, CYMBROWITZ, JAFFEE,
   HYNDMAN, PAULIN, COLTON, ABINANTI, SEAWRIGHT, SANTABARBARA, ZEBROWSKI,
   TAYLOR -- 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)  ANY
 PERSON  MAY  BRING  A  CIVIL  ACTION  AGAINST  AN INSURER IF SUCH PERSON
 SUFFERS DAMAGES AS PROVIDED IN THIS SECTION  WITH  REGARD  TO  A  POLICY
 ISSUED  OR  RENEWED  PURSUANT  TO THIS CHAPTER AGAINST ANY INSURER DOING
 BUSINESS IN THIS STATE UPON SUCH CLAIMANT PROVING BY A PREPONDERANCE  OF
 THE EVIDENCE THAT SUCH INSURER'S REFUSAL TO PAY OR UNREASONABLE DELAY IN
 PAYMENT OF AMOUNTS CLAIMED TO BE DUE UNDER A POLICY WAS NOT SUBSTANTIAL-
 LY  JUSTIFIED.  AN INSURER IS NOT SUBSTANTIALLY JUSTIFIED IN REFUSING TO
 PAY OR IN UNREASONABLY DELAYING PAYMENT WHEN THE INSURER:
   (1) FAILED TO PROVIDE THE CLAIMANT WITH ACCURATE INFORMATION  CONCERN-
 ING POLICY PROVISIONS RELATING TO THE COVERAGE AT ISSUE;
   (2)  FAILED  TO  EFFECTUATE IN GOOD FAITH A PROMPT, FAIR AND EQUITABLE
 SETTLEMENT OF A CLAIM OR PORTION OF A CLAIM AND WHERE THE INSURER FAILED
 TO REASONABLY ACCORD AT LEAST EQUAL OR MORE FAVORABLE  CONSIDERATION  TO
 ITS  INSURED'S  INTERESTS  AS  IT  DID TO ITS OWN INTERESTS, AND THEREBY
 EXPOSED THE INSURED TO A JUDGMENT IN EXCESS  OF  THE  POLICY  LIMITS  OR
 CAUSED OTHER DAMAGE TO A CLAIMANT;
   (3)  FAILED  TO PROVIDE A TIMELY WRITTEN DENIAL OF A CLAIMANT'S CLAIM,
 OR PORTION THEREOF, 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.
                                                            LBD00885-01-9

              

 A. 5623                             2
 
   (4) FAILED TO ACT IN GOOD FAITH BY COMPELLING SUCH CLAIMANT TO  INSTI-
 TUTE  SUIT  TO RECOVER AMOUNTS DUE UNDER ITS POLICY BY OFFERING SUBSTAN-
 TIALLY LESS THAN THE AMOUNTS ULTIMATELY RECOVERED IN SUCH SUIT;
   (5)  FAILED  TO  TIMELY PROVIDE, ON REQUEST OF THE POLICYHOLDER OR THE
 POLICYHOLDER'S REPRESENTATIVE, ALL REPORTS, LETTERS OR OTHER  DOCUMENTA-
 TION  ARISING FROM THE INVESTIGATION OF A CLAIM AND EVALUATING LIABILITY
 FOR OR VALUATION OF SUCH CLAIM; OR
   (6) REFUSED TO PAY A CLAIM WITHOUT CONDUCTING  A  REASONABLE  INVESTI-
 GATION PRIOR TO SUCH REFUSAL.
   (B)  ANY CLAIMANT 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 CLAIMANT 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.
   (C) ANY CLAIMANT MAY RECOVER DAMAGES FROM AN INSURER DOING BUSINESS 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  COMPENSATORY  DAMAGES,
 INTEREST, COSTS AND DISBURSEMENTS, 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 CLAIMANT'S
 RIGHT TO A TRIAL BY JURY FOR ANY CLAIMS ARISING UNDER THIS  SECTION  AND
 THE  RIGHTS  ENUMERATED  IN  THIS SECTION DO NOT PRECLUDE ANY COMMON LAW
 CLAIMS OR OTHER STATUTORY CLAIMS THAT MAY EXIST.
   (G) NOTWITHSTANDING ANY PROVISION OF ANY OTHER LAW, REGULATION OR RULE
 TO THE CONTRARY, THE CAUSE OF ACTION ESTABLISHED IN THIS  SECTION  SHALL
 BE  HEARD  IN  A COURT OF COMPETENT JURISDICTION, AND NO CONTRACT FOR AN
 INSURANCE POLICY SHALL CONTAIN A CLAUSE REQUIRING ARBITRATION OR FORBID-
 DING THE BRINGING OF A JOINT ACTION OR CLASS ACTION.
   § 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.

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5623--A
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 14, 2019
                                ___________
 
 Introduced  by  M.  of  A. WEINSTEIN, CUSICK, TITUS, CYMBROWITZ, JAFFEE,
   HYNDMAN, PAULIN, COLTON, ABINANTI, SEAWRIGHT, SANTABARBARA, ZEBROWSKI,
   TAYLOR -- read once and referred 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:
   § 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 REASON-
 ABLY JUSTIFIED. AN INSURER IS NOT REASONABLY 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 A PROMPT AND FAIR SETTLEMENT OF  A  CLAIM  OR
 ANY  PORTION  THEREOF,  AND  THE  INSURER FAILED TO REASONABLY ACCORD AT
 LEAST EQUAL OR MORE FAVORABLE CONSIDERATION TO ITS INSURED  INTEREST  AS
 IT  DID TO ITS OWN INTERESTS, AND THEREBY EXPOSED THE INSURED TO A JUDG-
 MENT IN EXCESS OF THE POLICY LIMITS;
   (3) FAILED TO PROVIDE A TIMELY  WRITTEN  DENIAL  OF  A  POLICYHOLDER'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.
                                                            LBD00885-02-9
              

 A. 5623--A                          2
 
   (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;
   (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 A PREPON-
 DERANCE OF THE EVIDENCE ESTABLISHES THE CLAIM AS TO  LIABILITY  NOTWITH-
 STANDING  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,  CONSEQUENTIAL 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.  FOR PURPOSES OF THIS SECTION, IT SHALL
 BE PRESUMED THAT CONSEQUENTIAL DAMAGES WERE WITHIN THE CONTEMPLATION  OF
 THE PARTIES AT THE TIME OF CONTRACTING.
   (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.

 A. 5623--A                          3
 
   (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.
   (G)  AN  ACTION  MAY  ALSO  BE MAINTAINED BY THE PERSONS IDENTIFIED IN
 PARAGRAPHS ONE, TWO AND THREE OF SUBSECTION (B) OF SECTION  THREE  THOU-
 SAND  FOUR  HUNDRED TWENTY OF THIS CHAPTER AGAINST AN INSURER TO RECOVER
 DAMAGES INCLUDING PUNITIVE DAMAGES AS THE COURT MAY ALLOW, AND  INTEREST
 MEASURED  FROM  THE  TIME OF FAILURE TO OFFER A REASONABLE SETTLEMENT IN
 ACCORDANCE WITH THIS SECTION, FROM SUCH INSURER TO THE  FULL  EXTENT  OF
 THE  JUDGMENT  AGAINST THE INSURED, NOT LIMITED TO THE POLICY LIMITS AND
 NOT SUBJECT TO THE  LIMITATIONS  AND  CONDITIONS  OF  PARAGRAPH  TWO  OF
 SUBSECTION  (A)  OF  SECTION  THREE THOUSAND FOUR HUNDRED TWENTY OF THIS
 CHAPTER, WHERE A PREPONDERANCE OF  THE  EVIDENCE  ESTABLISHES  THAT  THE
 INSURER  FAILED TO EFFECTUATE A PROMPT AND FAIR SETTLEMENT OF A CLAIM OR
 ANY PORTION THEREOF, AND WHERE UNDER  THE  TOTALITY  OF  THE  FACTS  AND
 CIRCUMSTANCES  RELATED  TO  THE  CLAIM, THE INSURER FAILED TO REASONABLY
 ACCORD AT LEAST EQUAL OR MORE FAVORABLE CONSIDERATION TO  ITS  INSURED'S
 INTERESTS  AS  IT  DID  TO  ITS  OWN  INTERESTS, AND THEREBY EXPOSED THE
 INSURED TO A JUDGMENT IN EXCESS OF THE POLICY LIMITS.
   (H) THE RIGHTS ENUMERATED IN THIS SECTION ARE NOT THE EXCLUSIVE  REME-
 DIES  AVAILABLE  TO  THE POLICYHOLDER AND DO NOT PRECLUDE ANY COMMON LAW
 CLAIMS OR OTHER STATUTORY CLAIMS THAT MAY EXIST OR RISE.
   § 2. Section 3425 of the insurance law is  amended  by  adding  a  new
 subsection (t) to read as follows:
   (T)  NO INSURER SHALL REFUSE TO ISSUE OR RENEW A COVERED POLICY SOLELY
 ON THE GROUND THAT THE POLICYHOLDER HAS BROUGHT AN  ACTION  PURSUANT  TO
 SECTION TWO THOUSAND SIX HUNDRED ONE-A OF THIS CHAPTER.
   §  3.  Paragraph  4 of subsection (a) of section 2601 of the insurance
 law, as amended by chapter 547 of the laws of 1997, is amended  to  read
 as follows:
   (4)  [not attempting in good faith] WHERE THE INSURER FAILED to effec-
 tuate A prompt[,] AND fair [and  equitable  settlements]  SETTLEMENT  of
 [claims  submitted  in  which  liability  has become reasonably clear] A
 CLAIM OR ANY PORTION THEREOF,  AND  THE  INSURER  FAILED  TO  REASONABLY
 ACCORD  AT  LEAST EQUAL OR MORE FAVORABLE CONSIDERATION TO ITS INSURED'S
 INTERESTS AS IT DID TO IT OWN INTERESTS, AND THEREBY EXPOSED THE INSURED
 TO A JUDGMENT IN EXCESS OF THE POLICY LIMITS, except where  there  is  a
 reasonable  basis supported by specific information available for review
 by the department that the claimant has caused  the  loss  to  occur  by
 arson.  After  receiving  a properly executed proof of loss, the insurer
 shall advise the claimant of acceptance or denial of  the  claim  within
 thirty working days;
   §  4. 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.