Senate Bill S6216A

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  6216--A
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 23, 2019
                                ___________
 
 Introduced  by  Sens. BAILEY, SKOUFIS -- read twice and ordered printed,
   and when printed to be committed to  the  Committee  on  Insurance  --
   recommitted  to  the  Committee on Insurance in accordance with Senate
   Rule  6,  sec.  8  --  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.
                                                            LBD00885-05-0
              

 S. 6216--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.

 S. 6216--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 COMPENSATORY DAMAGES, PUNITIVE DAMAGES  AS  THE  COURT
 MAY  ALLOW,  AND  INTEREST  MEASURED FROM THE TIME OF FAILURE TO OFFER A
 FAIR AND 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 INSUR-
 ER FAILED TO REASONABLY ACCORD AT LEAST EQUAL OR MORE FAVORABLE  CONSID-
 ERATION  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.