S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3516
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 30, 2021
                                ___________
 
 Introduced  by  Sens. BAILEY, SKOUFIS -- read twice and ordered printed,
   and when printed to be committed 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:
   § 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;
   (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;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD00340-01-1

 S. 3516                             2
 
   (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.
   (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-

 S. 3516                             3
 
 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.