Provides that payment of interest payment and attorney fees to claimant when payment of a claim is overdue shall be exclusive remedy

BILL NUMBER:S2892

Title of bill

An act to amend the insurance law, in relation to payment of interest penalty and attorney fees to a claimant when a claim is overdue and the ability of an insurer to assert a defense or deny a claim if timely payment is not made within thirty days after proof of claim has been submitted

Purpose

This bill would amend the insurance law by adding a new section 5106 and would allow insurers additional time to investigate potentially fraudulent no-fault automobile insurance claims.

Summary of provisions

Section 1 amends subsection (a) of section 5106 of the insurance law to include "payment of the interest and reasonable attorney fees to a claimant when payment of a claim is overdue shall be the exclusive remedy when an insurer fails to make timely payment. The failure of an insurer to make timely payment or issue a denial within thirty days after proof of claim has been submitted to an insurer shall not preclude such insurer from issuing a denial or asserting a defense after the thirty day period has elapsed."

Section 2 of this bill states that this act shall take effect sixty days after it shall become a law

Justification

This bill will help to reduce no fault insurance fraud thereby reducing premiums paid by consumers This legislation clarifies the exclusive penalty for an overdue payment to be interest and reason- able attorney fees. Additionally, the legislation permits the insurer to issue a denial after the thirty days and assert a defense after the thirty day period. Often times in cases of fraud the investigation takes longer than thirty days and requires additional time to determine the appropriate course of action.

Legislative history

S.1686 of 2011-12; S.6448 of 2009-10; S.2638 of 2007-08

Fiscal implications

Minimal.

Effective date

This act shall take effect sixty days after it shall become a law.