S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7139
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 11, 2023
                                ___________
 
 Introduced  by  M.  of  A.  WEINSTEIN  --  read once and referred 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 OR INJURED PERSON SHALL HAVE  A  PRIVATE  RIGHT  OF  ACTION
 AGAINST ANY INSURER DOING BUSINESS IN THIS STATE FOR DAMAGES AS PROVIDED
 IN  THIS SECTION UPON PROOF BY A PREPONDERANCE OF THE EVIDENCE THAT SUCH
 INSURER'S REFUSAL TO PAY OR UNREASONABLY DELAY PAYMENT  TO  THE  POLICY-
 HOLDER  OR INJURED PERSON OF AMOUNTS CLAIMED TO BE DUE UNDER A POLICY IS
 NOT REASONABLY JUSTIFIED. AN INSURER  IS  NOT  REASONABLY  JUSTIFIED  IN
 REFUSING TO PAY OR IS UNREASONABLY DELAYING PAYMENT WHEN THE INSURER:
   (1)  FAILS  TO  PROVIDE  THE  POLICYHOLDER  WITH  ACCURATE INFORMATION
 CONCERNING POLICY PROVISIONS RELATING TO THE COVERAGE AT ISSUE;
   (2) FAILS TO EFFECTUATE A PROMPT AND FAIR SETTLEMENT OF A CLAIM OR ANY
 PORTION THEREOF, IN THAT THE INSURER (I) FAILS TO REASONABLY  ACCORD  AT
 LEAST  EQUAL  OR MORE FAVORABLE CONSIDERATION TO ITS INSURED'S INTERESTS
 AS IT DID TO ITS OWN INTERESTS, AND THEREBY EXPOSES  THE  INSURED  TO  A
 JUDGMENT  IN  EXCESS  OF THE POLICY LIMITS, OR (II) REFUSES TO SETTLE IN
 RESPONSE TO A FAIR AND REASONABLE SETTLEMENT  OFFER  WITHIN  THE  POLICY
 LIMITS FROM AN INJURED PARTY;
   (3) FAILS TO PROVIDE A TIMELY WRITTEN DENIAL OF A POLICYHOLDER'S CLAIM
 WITH  A  FULL  AND COMPLETE EXPLANATION OF SUCH DENIAL, INCLUDING REFER-
 ENCES TO SPECIFIC POLICY PROVISIONS WHEREVER POSSIBLE;
   (4) FAILS 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.
                                                            LBD00045-01-3
              

 A. 7139                             2
 
 ATION  OF  A  CLAIM WITHIN A REASONABLE TIME NOT TO EXCEED SIX MONTHS OF
 THE DATE ON WHICH IT RECEIVED ACTUAL OR CONSTRUCTIVE NOTICE OF THE  LOSS
 UPON WHICH THE CLAIM IS BASED;
   (5)  FAILS TO ACT IN GOOD FAITH BY COMPELLING A POLICYHOLDER TO INSTI-
 TUTE SUIT OR COMPEL APPRAISAL TO RECOVER AMOUNTS DUE UNDER ITS POLICY BY
 OFFERING SUBSTANTIALLY LESS THAN THE  AMOUNTS  ULTIMATELY  RECOVERED  IN
 SUIT OR BY APPRAISAL;
   (6)  FAILS  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) FAILS 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)  REFUSES  TO  PAY A CLAIM WITHOUT CONDUCTING A REASONABLE INVESTI-
 GATION;
   (9) NEGOTIATES OR SETTLES 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)  NEGOTIATES OR SETTLES A CLAIM DIRECTLY WITH A POLICYHOLDER KNOWN
 TO BE REPRESENTED BY A LICENSED PUBLIC ADJUSTER;
   (11) NEGOTIATES OR SETTLES A CLAIM DIRECTLY WITH A CONTRACTOR OR UNLI-
 CENSED PUBLIC ADJUSTER;
   (12) REQUIRES A  POLICYHOLDER  TO  SUBMIT  DUPLICATIVE  OR  REPETITIVE
 INFORMATION ALREADY SUBMITTED BY A POLICYHOLDER OR AN INJURED PARTY; OR
   (13) ACTS 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, COSTS AND  DISBURSEMENTS,  CONSEQUENTIAL  DAMAGES,
 REASONABLE  ATTORNEYS'  FEES INCURRED BY THE POLICYHOLDER, INTEREST FROM
 THE DATE OF THE LOSS, AND PUNITIVE DAMAGES AS DETERMINED BY  THE  FINDER
 OF FACT.
   (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)  AN  ACTION MAY ALSO BE MAINTAINED BY ANY INJURED PERSON OR REPRE-
 SENTATIVE THEREOF INCLUDING, BUT NOT LIMITED TO, A GUARDIAN, ADMINISTRA-
 TOR, EXECUTOR, INDIVIDUAL WITH A POWER OF ATTORNEY OR ANY OTHER PERSONAL
 A. 7139                             3
 
 REPRESENTATIVE AGAINST AN INSURER TO RECOVER DAMAGES INCLUDING COSTS AND
 DISBURSEMENTS, CONSEQUENTIAL DAMAGES, REASONABLE ATTORNEY'S FEES, INTER-
 EST FROM THE TIME OF FAILURE TO OFFER A FAIR AND  REASONABLE  SETTLEMENT
 IN  ACCORDANCE  WITH THIS SECTION, AND PUNITIVE DAMAGES AS DETERMINED BY
 THE FINDER OF FACT OR COURT, NOT LIMITED TO THE POLICY LIMITS,  WHERE  A
 PREPONDERANCE  OF  THE  EVIDENCE  ESTABLISHES  THAT THE INSURER FAILS TO
 EFFECTUATE A PROMPT AND FAIR SETTLEMENT OF A CLAIM OR ANY PORTION THERE-
 OF, IN THAT UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES RELATED TO
 THE CLAIM, THE INSURER FAILS TO REASONABLY ACCORD AT LEAST EQUAL OR MORE
 FAVORABLE CONSIDERATION TO ITS INSURED'S INTERESTS AS IT DID TO ITS  OWN
 INTERESTS.
   (G) AT LEAST THIRTY DAYS PRIOR TO THE FILING OF ANY ACTION PURSUANT TO
 THIS  SECTION, A WRITTEN DEMAND FOR RELIEF, IDENTIFYING THE CLAIMANT AND
 REASONABLY DESCRIBING THE UNFAIR CLAIM SETTLEMENT ACT  OR  PRACTICE  AND
 THE  INJURY  SUFFERED, SHALL BE MAILED OR DELIVERED TO ANY INSURER DOING
 BUSINESS IN THIS STATE. ANY INSURER DOING BUSINESS IN THIS STATE RECEIV-
 ING SUCH A DEMAND FOR RELIEF WHO, WITHIN THIRTY DAYS OF THE  MAILING  OR
 DELIVERY  OF THE DEMAND FOR RELIEF, MAKES A WRITTEN TENDER OF SETTLEMENT
 WHICH IS REJECTED BY THE CLAIMANT MAY, IN ANY  SUBSEQUENT  ACTION,  FILE
 THE WRITTEN TENDER AND AN AFFIDAVIT CONCERNING ITS REJECTION AND THEREBY
 LIMIT  ANY  RECOVERY  TO THE RELIEF TENDERED IF THE FINDER OF FACT FINDS
 THAT THE RELIEF TENDERED WAS REASONABLE IN RELATION TO THE INJURY  ACTU-
 ALLY SUFFERED BY THE CLAIMANT. IN ALL OTHER CASES, IF THE FINDER OF FACT
 FINDS  FOR  THE  CLAIMANT,  RECOVERY  SHALL  BE  IN THE AMOUNT OF ACTUAL
 DAMAGES; OR UP TO THREE BUT NOT LESS THAN TWO TIMES SUCH AMOUNT  IF  THE
 FINDER  OF  FACT  FINDS THAT THE UNFAIR CLAIM SETTLEMENT ACT OR PRACTICE
 WAS A WILLFUL OR KNOWING VIOLATION OF SUBSECTION  (A)  OR  (F)  OF  THIS
 SECTION  OR THAT THE REFUSAL TO GRANT RELIEF UPON DEMAND WAS NOT REASON-
 ABLY JUSTIFIED WITH KNOWLEDGE OR REASON TO KNOW THAT THE ACT OR PRACTICE
 COMPLAINED OF VIOLATED SUBSECTION (A) OR (F) OF THIS  SECTION.  FOR  THE
 PURPOSES  OF THIS CHAPTER, THE AMOUNT OF ACTUAL DAMAGES TO BE MULTIPLIED
 BY THE FINDER OF FACT SHALL BE THE AMOUNT OF THE DAMAGES  AS  DETERMINED
 BY THE FINDER OF FACT ON ALL CLAIMS ARISING OUT OF THE SAME AND UNDERLY-
 ING  TRANSACTION OR OCCURRENCE, REGARDLESS OF THE EXISTENCE OR NONEXIST-
 ENCE OF INSURANCE COVERAGE AVAILABLE IN PAYMENT OF THE CLAIM.  IN  ADDI-
 TION,  THE  COURT  SHALL AWARD SUCH OTHER EQUITABLE RELIEF, INCLUDING AN
 INJUNCTION, AS IT DEEMS TO BE NECESSARY AND PROPER.  THE DEMAND REQUIRE-
 MENTS OF THIS SUBSECTION SHALL NOT APPLY IF THE CLAIM IS ASSERTED BY WAY
 OF COUNTERCLAIM OR CROSS-CLAIM.
   (H) THE RIGHTS ENUMERATED IN THIS SECTION ARE NOT THE EXCLUSIVE  REME-
 DIES  AVAILABLE  TO THE POLICYHOLDER OR INJURED PERSON OR REPRESENTATIVE
 THEREOF INCLUDING, BUT NOT LIMITED TO, A GUARDIAN, ADMINISTRATOR, EXECU-
 TOR, INDIVIDUAL WITH POWER OF ATTORNEY OR ANY OTHER  PERSONAL  REPRESEN-
 TATIVE  AND  DO  NOT  PRECLUDE  ANY COMMON LAW CLAIMS OR OTHER STATUTORY
 CLAIMS THAT MAY EXIST OR ARISE.
   (I) UPON DEMAND OF A CLAIMANT POLICYHOLDER OR INJURED PERSON  PURSUANT
 TO  THIS  SECTION,  AN  INSURER  SHALL MAKE AVAILABLE TO THE CLAIMANT OR
 INJURED PERSON THE ENTIRE CLAIM FILE WITHIN THIRTY DAYS.
   (J) A POLICYHOLDER OR INJURED PERSON SHALL HAVE THE RIGHT TO  A  TRIAL
 BY  JURY. NO MANDATORY ARBITRATION AGREEMENT WITHIN OR PART OF ANY WRIT-
 TEN CONTRACT FOR INSURANCE SHALL PROHIBIT AN  ACTION  PURSUANT  TO  THIS
 SECTION.
   §  2.  Section  3425  of  the insurance law is amended by adding a new
 subsection (t) to read as follows:
 A. 7139                             4
 
   (T) NO INSURER SHALL REFUSE TO ISSUE OR RENEW A COVERED POLICY  SOLELY
 ON  THE  GROUNDS 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 FAILS to effectu-
 ate  A  prompt[,]  AND  fair  [and  equitable settlements] SETTLEMENT of
 [claims submitted in which liability  has  become  reasonably  clear]  A
 CLAIM  OR  ANY  PORTION THEREOF, IN THAT THE INSURER FAILS TO REASONABLY
 ACCORD AT LEAST EQUAL OR MORE FAVORABLE CONSIDERATION TO  ITS  INSURED'S
 INTERESTS  AS  IT  DID  TO  ITS  OWN  INTERESTS, AND THEREBY EXPOSES 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.