A New York state lawmaker recently introduced a piece of legislation that aims to prevent unfair claim settlement practices during a declared state emergency.Assemblywoman Nicole Malliotakis (R,C,I-Brooklyn, Staten Island) announced on Jan. 13 that she has drafted legislation that would specifically define what would constitute an unfair claims settlement practice during a declared state disaster emergency, and create a private right of action for violations thereof.
“Poor communication, little action, and lack of urgency from insurance carriers are among the most stressful issues my constituents are facing in the aftermath of Hurricane Sandy,” Malliotakis said in a statement.
“It’s completely unreasonable for customers who have fulfilled their end of the bargain for years to be forced to deal with nonsense like unreturned phone calls and unjustified denials. Residents face a long road to recovery and certain insurance carriers have provided nothing but obstacles. It’s time they assumed their rightful role as part of the solution, rather than the problem. It’s time New York changed its laws to protect the consumer and not the insurance company.”
Under the proposed legislation, the following actions would be unfair claim settlement practices during a declared state disaster emergency:
• attempting to settle a claim on the basis of a document that was altered without notice to the consumer;
• making a material misrepresentation for the purpose of settling a claim on less favorable terms than those provided in the policy;
• failing to promptly notify the insured of any additional information necessary for the processing of the claim, as well as the reasons why such information is necessary;
• failing to conduct an on-site inspection within seven business days from submission of the claim;
• failing to provide the claimant with a copy of the adjuster’s report within three business days from the inspection;
• failing to provide a determination on the claim within 30 calendar days from furnishing claimant with a copy of the report;
• failing to provide a written denial of a policy holder’s claim with a full and complete explanation of such denial, including references to specific policy provisions wherever possible; and
• if damages are determined to be covered under the policy, failing to pay at least 20 percent of the total claim upon such determination and the claim in full within 30 days of determination.
Furthermore, the bill would create a civil remedy for insured against the insurance carrier upon proving an unfair claim settlement practice during a declared state disaster emergency.
Recently Introduced Bills in N.Y., N.J. Post-Sandy
New York and New Jersey lawmakers have recently introduced a number of insurance claims-related legislation in the wake of Sandy. These bills include:
• The “Homeowners Bill of Rights” bill, sponsored by New York Assembly Speaker Sheldon Silver. The proposed bill would require insurers to provide property owners with an easy-to-understand disclosure notice detailing their coverage in the event of a catastrophic occurrence.
• The New Jersey Assembly bill A3642. It would require homeowners insurers to give policyholders a one-page summary of the policy explaining “notable coverages and exclusions under the policy” that are “written in a simple, clear, understandable, and easily readable way.”
• The New York Assembly bill (S01760/A01222). It seeks to cap the percentage-based hurricane deductibles for homeowners’ insurance or dwelling fire personal lines policy in New York State at $1,500. It also seeks to establish that such hurricane deductibles shall only be applicable to losses incurred in windstorms with speeds greater than 125 miles per hour.