What's happening
This bill allows individuals to sue liability insurers for compensatory damages above policy limits if insurers fail to promptly and fairly settle claims.
Why it matters
Shifts leverage toward policyholders and claimants. By allowing lawsuits for damages above policy limits if insurers act unreasonably, the bill pressures insurers to prioritize fair settlements and not just their own financial interests, potentially leading to quicker, more equitable claim resolutions.
Reduces risk of financial ruin for insured individuals. The threat of excess judgments often leaves insured parties personally liable when insurers refuse fair settlements. This bill gives insured people a way to recover those losses from insurers, protecting them from catastrophic financial harm.
Raises accountability standards for insurance companies. The law sets a clear expectation that insurers must treat their policyholders’ interests at least as favorably as their own. Failure to do so becomes a provable legal violation, incentivizing better industry practices.
Could impact insurance costs and litigation patterns. By increasing potential insurer liability, the bill may prompt insurers to adjust claims handling or premiums, and could result in more litigation as claimants and insureds test the new legal remedy.
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Who cares
Headline styles
Hold Insurers Accountable for Settlements
Plain English, a few words. Used as the page title.
Sponsors
13 Co-sponsors
1 Multi-sponsor
History
- Referred to codes
- Amend and recommit to rules 5629b
- Reported referred to rules
- Reported referred to codes
- Print number 5629a
- Amend and recommit to insurance
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Insurers Pay Over Policy Limits
In Senate Committee · Insurance · Sponsor Neil D. Breslin
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5629--B
2019-2020 Regular Sessions
IN ASSEMBLY
February 14, 2019
Introduced by M. of A. WEINSTEIN, TITUS, SEAWRIGHT, ZEBROWSKI, COLTON, CYMBROWITZ, JAFFEE, HEVESI, HUNTER, D'URSO, ABINANTI, GOTTFRIED, TAYLOR, MOSLEY, DE LA ROSA -- Multi-Sponsored by -- M. of A. MORINELLO -- read once and referred to the Committee on Insurance -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- reported and referred to the Committee on Codes -- reported and referred to the Committee on Rules -- Rules Committee discharged, bill amended, ordered reprinted as amended and recommitted to the Committee on Rules
AN ACT to amend the insurance law, in relation to maintaining an action against a liability insurer seeking compensatory damages in excess of the policy limits where such insurer failed to engage in prompt and fair settlement of the claim
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 3420 of the insurance law is amended by adding a new subsection (b-1) to read as follows:
(b-1) An action may also be maintained by the persons identified in paragraphs one, two and three of subsection (b) of this section against the insurer to recover damages including compensatory damages and interest measured from the time of failure to offer a fair and reasonable settlement in accordance with this section, from such insurer to the full extent of the judgment against the insured, not limited to the policy limits and not subject to the limitations and conditions of paragraph two of subsection (a) of this section, where a preponderance of the evidence establishes that the insurer failed to effectuate a prompt and fair settlement of a claim or any portion thereof, and where under the totality of the facts and circumstances related to the claim, the insurer failed to reasonably accord at least equal or more favorable consideration to its insured's interests as it did to its own interests, and thereby exposed the insured to a judgment in excess of the policy limits.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00917-04-9
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.