What's happening
The bill clarifies that if an insurer pays a claim late, the claimant's remedy is interest and attorney fees, but the insurer can still deny or defend the claim after thirty days.
Why it matters
Limits claimants’ remedies for late payment. By specifying that interest and attorney’s fees are the only remedies if an insurer pays a claim late, the bill prevents claimants from seeking additional damages or penalties, which could otherwise be a risk for insurers.
Preserves insurer’s right to deny claims after 30 days. Even if an insurer does not pay or deny a claim within the required 30-day window, it can still later deny the claim or raise defenses, potentially making it harder for claimants to secure payment just based on procedural delays.
Changes incentives for both insurers and claimants. Insurers may be less pressured to strictly adhere to the 30-day deadline since their maximum penalty is limited, while claimants gain some guaranteed compensation for late payments but lose the leverage of stronger legal actions.
Clarifies litigation outcomes. The amendment reduces legal ambiguity around late insurance payments, making it clearer what both parties can expect if deadlines are missed, which could decrease the number of costly, drawn-out disputes.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Limit Remedies for Late Claims
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to insurance
- Referred to insurance
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3513
2019-2020 Regular Sessions
IN SENATE
February 8, 2019
Introduced by Sens. BRESLIN, SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
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
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subsection (a) of section 5106 of the insurance law is amended to read as follows:
(a) Payments of first party benefits and additional first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within thirty days after the claimant supplies proof of the fact and amount of loss sustained. If proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid within thirty days after such proof is supplied. All overdue payments shall bear interest at the rate of two percent per month. If a valid claim or portion was overdue, the claimant shall also be entitled to recover his attorney's reasonable fee, for services necessarily performed in connection with securing payment of the overdue claim, subject to limitations promulgated by the superintendent in regulations. Payment of the interest penalty 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.
§ 2. This act shall take effect on the sixtieth day after it shall have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09659-01-9
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
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 fraudu- lent 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 reme- dy 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 reasonable 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 appropri- ate course of action.
Legislative history
S.779 of 2017-18; S.1056 of 2015-16; S.2892 of 2013-14; S.1686 of 2011-12; S.6448 of 2009-2010; S.2638 of 2007-08
Fiscal implications
Minimal.
Effective date
This act shall take effect sixty days after it shall become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.