S T A T E O F N E W Y O R K
________________________________________________________________________
2832--A
2017-2018 Regular Sessions
I N A S S E M B L Y
January 23, 2017
___________
Introduced by M. of A. WEINSTEIN, CUSICK, TITUS, CYMBROWITZ, JAFFEE,
HYNDMAN, JENNE, SKOUFIS, PAULIN, COLTON, ABINANTI, SEAWRIGHT, SEPULVE-
DA, SANTABARBARA, ZEBROWSKI -- Multi-Sponsored by -- M. of A. KEARNS,
McDONOUGH, RAIA -- read once and referred to the Committee on Insur-
ance -- 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) 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;
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02844-03-7
A. 2832--A 2
(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;
(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.