S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2832
 
                        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

 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 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 SUBSTANTIALLY JUSTIFIED. AN
 INSURER IS NOT SUBSTANTIALLY JUSTIFIED IN REFUSING TO PAY OR  IN  UNREA-
 SONABLY 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 IN GOOD FAITH A PROMPT,  FAIR  AND  EQUITABLE
 SETTLEMENT  OF A CLAIM SUBMITTED BY SUCH POLICYHOLDER IN WHICH LIABILITY
 OF SUCH INSURER TO SUCH POLICYHOLDER WAS REASONABLY CLEAR;
   (3) FAILED TO PROVIDE A WRITTEN DENIAL OF A POLICYHOLDER'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  POLICYHOLDER
 IN WRITING OF ITS POSITION ON BOTH LIABILITY FOR AND THE INSURER'S VALU-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02844-01-7
              

 A. 2832                             2
 
 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 THERE IS
 NO DISPUTE AS TO LIABILITY NOTWITHSTANDING 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,  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 ON A SHOWING THAT THE  ACTS  GIVING  RISE  TO  LIABILITY
 OCCUR WITH SUCH FREQUENCY AS TO INDICATE A GENERAL BUSINESS PRACTICE.
   (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.
   (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.

 A. 2832                             3
 
   §  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.