S T A T E   O F   N E W   Y O R K
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                                  3698

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            January 28, 2009
                               ___________

Introduced by M. of A. GIANARIS, DINOWITZ -- Multi-Sponsored by -- M. of
  A. PHEFFER -- 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 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
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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02831-01-9
              

A. 3698                             2

  (5)  FAILED TO ACT IN GOOD FAITH BY COMPELLING POLICY HOLDER 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 POLICY HOLDER.
  (B) ANY POLICY HOLDER WHO ESTABLISHES LIABILITY PURSUANT TO SUBSECTION
(A)  OF THIS SECTION AND THAT SUCH LIABILITY AROSE AS A RESULT OF INTEN-
TIONAL, RECKLESS OR GROSSLY NEGLIGENT  CONDUCT  BY  THE  INSURER  OR  AN
EXPRESS  OR IMPLIED POLICY OF THE INSURER FOR PROCESSING CLAIMS SHALL BE
ENTITLED TO RECOVER PUNITIVE DAMAGES IN AN  AMOUNT  NOT  MORE  THAN  THE
TOTAL AMOUNT RECOVERED IN THE ACTION.
  (C) 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 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.
  (D) 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.
  (E)  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.
  (F)  ALL  AMOUNTS  RECOVERED  FROM  AN  INSURER  AS ACTUAL 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 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 date.