Provides that an insurer doing business in this state shall be liable to a policy holder for such insurer's refusal to pay or unreasonable delay of payment to the policy holder if such refusal or delay was not substantially justified; enumerates instances whereby an insurer's refusal or delay of payment is not substantially justified including intentional negligence, failure to act in good faith, failure to provide written denial of claim, failure to make final determination of claim within six months, and failure to promptly proceed with the appraisal process.
A07102 would create a new civil remedy in the Insurance Law for policyholders whose insurers refuse to pay, or unreasonably delay paying, amounts due under a policy without substantial justification. The bill defines several situations that would count as unjustified conduct, including failing to provide accurate coverage information, failing to settle a claim in good faith when liability is reasonably clear, failing to issue a timely written denial with a full explanation, failing to make a final coverage and valuation decision within six months of notice of loss, forcing a policyholder to sue by offering substantially less than the amount later recovered, and failing to promptly begin appraisal after it is demanded.
If a policyholder proves a violation, the bill allows recovery of policy benefits plus interest, costs, disbursements, compensatory damages, consequential damages, reasonable attorneys’ fees, and punitive damages capped at twice the value of the covered loss. The bill also requires a civil remedy notice to be filed with both the insurer and the Department of Financial Services at least 60 days before suit, giving the insurer an opportunity to cure by paying the claimed damages. The remedy is available either within a coverage action or in a separate lawsuit, and it does not replace other common-law or statutory claims.
The bill would significantly expand insurer exposure under New York law by creating an express statutory cause of action for unfair claim settlement practices. It would also change litigation practice by making settlement discussions, compromise offers, loss reserves, and other claims-handling evidence admissible in these cases, and it would permit courts to bifurcate trials to separate coverage issues from bad-faith issues. In addition, damages recovered under the new section would not be included by insurers when setting premiums for policyholders.
Overall, the bill appears aimed at strengthening consumer protections and improving insurer claims-handling behavior, with an emphasis on prompt payment, transparency, and good-faith settlement practices. The available context shows no recorded committee discussion or votes, so there is no documented formal opposition or support in the provided materials. Based on the bill text alone, likely points of contention would be the expanded private right of action, the availability of consequential and punitive damages, the admissibility of settlement-related evidence, and the potential effect on insurance costs and litigation volume.
The bill would amend the New York Insurance Law by adding a new section 2601-a that creates a private civil remedy against insurers for certain unfair claim settlement practices. It would affect insurers doing business in New York and policyholders covered under policies issued or renewed under article 34, while also implicating the Department of Financial Services through the required civil remedy notice process. The measure would expand available damages and alter evidentiary rules in insurer bad-faith litigation, and it would direct insurers not to factor certain recovered damages into premium-setting determinations.
No committee transcript or vote record was provided, so there is no documented legislative sentiment from debate or roll call in the supplied materials. The bill’s text suggests a pro-consumer, insurer-accountability approach, indicating likely support from consumer advocates and policyholder interests. At the same time, the breadth of the remedy and damages provisions suggests likely concern from insurers and business groups about litigation exposure and premium impacts.
The main likely points of contention are the creation of a new private right of action for unfair claim settlement practices, the inclusion of consequential and punitive damages, and the admissibility of settlement negotiations and loss reserve evidence. Insurers would likely object to the six-month decision deadline, the 60-day notice-and-cure process, and the possibility that routine claims disputes could become expanded bad-faith lawsuits. Supporters would likely argue that the bill is needed to deter delay, improve transparency, and give policyholders meaningful remedies when insurers fail to pay valid claims.