Establishes a private right of action for the insured for unfair insurance settlement practices when the claim relates to loss or injury in an area where the governor has declared a disaster emergency

BILL NUMBER:S4223

Title of bill

An act to amend the insurance law, in relation to establishing a private right of action for unfair claim settlement practices by an insurer

Purpose

This bill amends the insurance law by establishing a private right of action for consumers who have been affected by unfair claims practices by insurers and also provides for punitive damages where there is a finding of an insurer's willful or knowing violation of section 2601 of the insurance law. The bill would apply to any loss or injury sustained relating to an insurance claim for property damage in an area affected encompassed by executive order declaring a disaster emergency as per section twenty-eight of the Executive Law.

Summary of provisions

Section 1 would create a private right of action for any unfair claims practices by insurers relative to a disaster emergency as per section twenty-eight of the Executive Law.

Section 2 is the effective date.

Justification

Unfortunately, there is evidence that some insurers have taken advantage of insured as concerns the adjusting of losses sustained in disaster emergencies declared by the Governor pursuant to section twenty-eight of the Executive Law.

Insurers have every right to attempt to lawfully deny claims, but all too often these attempts create unreasonable situations for homeowners attempting to simply access the benefits to which they are entitled. This is especially acute in situations where the homeowner may have lost most or even all of their possessions due to a storm declared emergency.

This bill would allow insureds to institute claims against their insurers for unfair claims practices proscribed by the Insurance Law. More importantly, this bill would amend section 2601 of the Insurance Law to allow insured homeowners who have suffered property loss to take direct action against their insurers for unfair claims practices where the claimed losses were sustained within the area declared as a disaster emergency. A private right of action is necessary, in addition to the possibility of administrative action, to make certain that insurers are held responsible for unfair claims practices.

Additionally, this proposal would permit an award of punitive damages for an insurer's willful unfair claims practices in violation of section 2601 of the insurance law.

Legislative history

A.5780 of 2013-14.

Fiscal implications

None.

Effective date

Immediately.