Creates a homeowners' bill of rights to inform consumers with regards to insuring against catastrophic loss

Summary of specific provisions

Section 1 of the bill would amend the Insurance law by adding a new section 3444-a, the "Homeowners Bill of Rights." This section would obligate certain insurers to provide to insured or potentially insured parties written disclosures describing: coverage or limitations on coverage for losses caused by certain catastrophic occurrences, informa- tion related to claims investigation and processing, the rights of the insured under the law, that the provisions of the policy could be modi- fied or changed pursuant to state or federal law following a disaster or emergency, the insurer's contact information, information on obtaining the Consumer's Guide on Insuring Against Catastrophic Losses, and any other information deemed necessary by the Superintendent. In addition, when the insured's policy does not include coverage for certain catastrophic occurrences, the insurer would be required to provide information on additional coverage options.

Section 2 of the bill would amend Section 2601 of the insurance law to include a new paragraph (7). This paragraph would state that the knowing misrepresentation of or failure to provide pertinent facts of policy provisions to claimants, and the failure to comply with those policy provisions, shall constitute an unfair claim settlement practice.

Section 3 of the bill would add a new section 338 to the Insurance law. This section would instruct the Superintendent to create a Consumer's Guide on Insuring Against Catastrophic Losses, and outlines the informa- tion which the Superintendent must include in the Guide. The Guide would include the ways in which certain occurrences can cause catastrophic losses, the types of insurance that provide coverage against catastroph- ic losses, information on which type of weather, natural disasters, and other occurrences and catastrophic losses are typically excluded from insurance policies and how a consumer may obtain coverage for those exclusions, steps a consumer can-take to prepare for a natural disaster. or other catastrophic loss, steps a consumer can take to facilitate the timely processing of an insurance claim and an explanation of policyholder's rights in law and regulation, and a department toll-free consumer hotline and website address through which consumers may initi- ate complaints and request general information about insurance. The department would be able to satisfy these requirements through separate or supplemental publications and updates, and the Superintendent would be required to post the "Consumer Guide on insuring Against Catastrophic Losses" on the Department's website.

Justification

Following Superstorm Sandy and Tropical Storms Irene and Lee, many policyholders were surprised that their insurance company either rejected their claim or offered them a settlement amount that was significantly lower than the cost of the damages. Many policyholders thought that their existing insurance policy provided sufficient cover- age for water damage and other catastrophic losses caused by these storms. Often, there were long delays in the investigation and settle- ment of claims, leaving home and business owners in limbo for weeks, sometimes months. It became clear to the victims of these storms that insurance policies can be complex, the claims process can be burdensome for the policyholder, and insurance companies can be unresponsive at a time when assistance is needed the most. Policyholders should be made aware of the different insurance coverage options available, the bene- fits of each option, and their rights under the law.

This bill would address these issues by requiring insurers to provide insureds and prospective insureds with a notice containing a Homeowners' Bill of Rights. The notice would inform consumers of the coverage provided and any exclusions, how they can obtain additional coverage, their rights under the law, and other information that will educate consumers about their insurance coverage. This will ensure that policy- holders have coverage that meets their needs.

Prior legislative history

2014: S3045 Referred to Insurance

Fiscal implications for state and local governments

To be determined.

Effective date

This act shall take effect on the same date and in the same manner as section 27 of part H of chapter 60 of the laws of 2014 takes effect.