Establishes standards for the prompt investigation and settlement of claims arising out of states of emergency and disasters

Summary of provisions

Section 1. Adds a new section 2616 to the insurance law to require every insurer authorized to write policies in New York State that cover loss or damage to real property, personal property, or other liabilities for loss of, damage to, or injury to persons or property to begin investigating a claim arising from a declared disaster or emergency and inform the insured of all items, statements, and forms that the insurer believed will be required of the claimant in accordance with regulations promulgated by the Superintendent of Financial Services. If the insurer wishes the investigation to include an inspection of damaged or destroyed property, such inspection would have to occur in accordance with regulations promulgated by the Superintendent. In addition, insurers would have to allow claimants to make certain repairs necessary to protect health and safety and to accept an alternative proof of loss from the claimant.

Within fifteen business days after receiving all the items, statements, and forms that the insurer required from the claimant, the insurer would be required to advise the claimant in writing whether the insurer has accepted or rejected the claim. An insurer would be allowed a one-time extension of fifteen additional business days to continue its investigation, provided that the insurer notifies the claimant of the reasons additional time is needed for the investigation.

If the insurer has accepted the claim, the claimant would have to be notified of the amount the insurer is offering to settle the claim and of all applicable policy provisions regarding the claimant's right to reject and appeal the insurer's offer. If the insurer rejects the claim, the insurer would have to inform the claimant of all applicable policy provisions regarding the claimant's right to appeal the decision. An insurer would be required to pay the claim not later than three business days from the settlement of the claim.

Section 2. Effective date.

Justification

When a disaster or emergency strikes, policyholders frequently rely on their insurance policies to be made whole again. Insurance payouts are often necessary for homeowners and businesses to make repairs or to replace damaged property. In addition, repairs often need to be made

quickly in order to ensure the health and safety of the policyholders and the community. Moreover, a delay in insurance payments can result in a,delay in FEMA assistance, as FEMA will not provide payment for damages until insurance claims are fully processed.

Following Superstorm Sandy and Tropical Storms Irene and Lee, it was found that there were often lengthy delays in the time it was taking insurance companies to investigate and process claims and make payments to policyholders. Following Sandy, the Department of Financial Services found it necessary to issue an emergency regulation that required insurers to begin an investigation within 6 business days of receiving a Sandy-related claim; if the insurer sought an inspection of the damaged property, the inspection would have to be performed within those 6 business days.

This bill would address this issue by requiring insurers to respond to a claim arising from a disaster or emergency in accordance with regulations established by the Superintendent of Financial Services, accept or reject a claim within fifteen business days of closing the investigation, and pay a claim within three business days of the claim being settled.

Legislative history

S3413-A/A1092-A: 2013 - Insurance Committee/Passed Assembly 2014 - Insurance Committee/Insurance Committee

Fiscal implications

None.

Effective date

This act shall take effect immediately.