STATE OF NEW YORK ________________________________________________________________________ 2487 2023-2024 Regular Sessions IN SENATE January 20, 2023 ___________ Introduced by Sen. COMRIE -- 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: 1 Section 1. The insurance law is amended by adding a new section 2601-a 2 to read as follows: 3 § 2601-a. Unfair claim settlement practices; civil remedy. (a) An 4 insurer doing business in this state shall be liable to the holder of a 5 policy issued or renewed pursuant to article thirty-four of this chapter 6 for damages as provided in this section upon such policy holder proving 7 by a preponderance of the evidence that such insurer's refusal to pay or 8 unreasonable delay in payment to the policy holder of amounts claimed to 9 be due under a policy was not substantially justified. An insurer is 10 not substantially justified in refusing to pay or in unreasonably delay- 11 ing payment when the insurer: 12 (1) intentionally, recklessly or by gross negligence failed to provide 13 the policy holder with accurate information concerning policy provisions 14 relating to the coverage at issue; 15 (2) failed to effectuate in good faith a prompt, fair and equitable 16 settlement of a claim submitted by such policy holder in which liability 17 of such insurer to such policy holder was reasonably clear; 18 (3) failed to provide a timely written denial of a policy holder's 19 claim with a full and complete explanation of such denial, including 20 references to specific policy provisions wherever possible; 21 (4) failed to make a final determination and notify the policy holder 22 in writing of its position on both liability for, and the insurer's 23 valuation of, a claim within six months of the date on which it received 24 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. LBD01189-01-3S. 2487 2 1 (5) failed to act in good faith by compelling the policy holder to 2 institute suit to recover amounts due under its policy by offering 3 substantially less than the amounts ultimately recovered in suit brought 4 by such policy holder; or 5 (6) failed to promptly proceed with the appraisal process once such 6 has been demanded in any claim where coverage for a portion of the claim 7 has been accepted by such insurer and a disagreement exists between the 8 insured and the insurer with respect to the value of covered property or 9 the amount, or extent of the covered loss. 10 (b) Any policy holder who establishes liability pursuant to subsection 11 (a) of this section shall be entitled to recover, in addition to amounts 12 due under the policy, interest, costs, and disbursements, compensatory 13 damages, consequential damages and reasonable attorneys' fees incurred 14 by the policy holder from the date of the loss, in recovering monies due 15 pursuant to the terms of the policy as well as punitive damages capped 16 at two times the value of the covered loss established at trial. 17 (c) Any policy holder may recover damages from an insurer doing busi- 18 ness in this state pursuant to this section either as part of an action 19 to recover under the terms of an insurance policy or in a separate 20 action. 21 (1) As a condition to any recovery pursuant to subsection (a) of this 22 section, a civil remedy notice of the alleged violation must be filed 23 with both the insurer and the department at least sixty days prior to 24 commencement of an action seeking relief pursuant to subsection (a) of 25 this section. 26 (2) The civil remedy notice must be on a form approved by the depart- 27 ment and include the following information, if such information is 28 reasonably known to the insured: 29 (A) The statutory provision, including the specific language of the 30 statute which the insurer is alleged to have violated. 31 (B) The facts and circumstances giving rise to the violation. 32 (C) The name of any individual involved in the violation. 33 (D) Reference to specific policy language that is relevant to the 34 violation, if any. 35 (E) A statement that the notice is given in order to protect the right 36 to pursue the civil remedy. 37 (3) The insurer who is the subject of the civil remedy notice shall 38 have sixty days from the filing of the required notice to cure the 39 violation. No civil action under this section will be sustainable if, 40 within sixty days after the required notice filing, the damages sought 41 are paid. 42 (4) The rights enumerated herein are not the exclusive remedies avail- 43 able to the insured and do not preclude any common law claims or other 44 statutory claims that may exist. 45 (d) In any trial of a cause of action asserted against an insurer 46 pursuant to this section, evidence of settlement discussions written and 47 verbal offers to compromise, loss reserve amounts and other evidence 48 relating to the claims process shall be admissible. If causes of action 49 relating to liability of the insurer under the policy and under this 50 section are alleged in the same action, the court may bifurcate the 51 trial of issues so as to avoid prejudice to the insurer on the issue of 52 liability under the policy and facilitate admissibility of evidence on 53 the causes of action asserted pursuant to this section. 54 (e) All amounts recovered from an insurer as actual damages, conse- 55 quential damages, reasonable attorneys' fees and punitive damages in any 56 action authorized in this section shall be excluded by the insurer inS. 2487 3 1 its determinations of the premiums it will charge all policy holders on 2 all policies issued by it. 3 § 2. This act shall take effect on the first of January next succeed- 4 ing the date on which it shall have become a law, and shall apply to all 5 acts and omissions by insurers occurring on or after such effective 6 date.