S T A T E   O F   N E W   Y O R K
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                                  3521

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                            January 28, 2013
                               ___________

Introduced  by M. of A. ROZIC -- read once and referred to the Committee
  on Insurance

AN ACT to amend the insurance law, in relation to enacting the  "abusive
  insurance practices remedy act"

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Short title. This act shall be known and may  be  cited  as
the "abusive insurance practices remedy act".
  S  2.  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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05097-01-3
              

A. 3521                             2

ACTUAL OR CONSTRUCTIVE NOTICE OF THE LOSS UPON WHICH THE CLAIM IS BASED;
OR
  (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  POLICY  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  3. 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.