Provide to provide greater clarity in insurance claim settlements, the appraisal process and procedural safeguards to enhance consumer protections against bad faith practices by insurers.
H6370 revises Rhode Island insurance law to expand and clarify remedies for insureds when an insurer allegedly acts in bad faith or engages in unfair claims handling. It amends the state’s bad-faith cause of action to make clear that an insured may sue an insurer for wrongfully refusing to pay, settle, or timely perform obligations under an insurance contract, and may seek compensatory damages, punitive damages, and attorney’s fees. The bill also states that this bad-faith claim is independent of a breach-of-contract claim, so an insured would not have to prove a contract breach first.
The bill substantially rewrites the standard fire insurance policy provisions and the state’s unfair claims settlement practices statute. It adds detailed rules for appraisal of fire and property losses, including deadlines for selecting appraisers and an umpire, requirements that appraisers determine actual cash value and replacement cost value, payment deadlines after an award, and a requirement that an insurer disputing an appraisal award deposit the award amount into court. It also updates the list of unfair claims practices to include numerous conduct rules involving property, auto, and rental claims, such as prompt investigation, appraisal timing, direction-to-pay procedures, labor depreciation, consequential damage, total-loss determinations, and treatment of public adjusters and repair shops.
The bill would affect Chapters 9-1, 27-5, and 27-9.1 of the Rhode Island General Laws by expanding insureds’ litigation rights, modernizing the standard fire policy, and adding many new insurer conduct requirements. It would apply to insurers handling claims in Rhode Island, including domestic, foreign, and alien insurers when settling claims on Rhode Island-registered vehicles repaired in Rhode Island, regardless of where the policy originated. The measure would also affect auto body repair shops, restoration companies, rental car companies, public adjusters, mortgagees, and policyholders by creating new procedural and payment obligations for claim handling and appraisal.
The bill’s stated purpose and structure suggest a generally pro-consumer sentiment, emphasizing clarity in claim settlements and stronger protections against bad faith and unfair claims practices. The absence of recorded committee testimony or votes means there is no documented public debate in the provided materials, but the bill text itself reflects a strong policy preference for faster, more transparent, and more claimant-friendly insurance claim resolution. Overall, the measure appears designed to respond to concerns from insureds and repair-related businesses about insurer delay, underpayment, and appraisal disputes.
The most likely points of contention are the bill’s expanded insurer liabilities and the extensive operational requirements imposed on claims handling. Insurers may object to the broadened bad-faith remedy, the independent cause of action, the appraisal deadlines, the court-deposit requirement for disputed awards, and the detailed restrictions on valuation methods, labor depreciation, and total-loss determinations. Auto body repair shops and public adjusters may support the bill’s payment and appraisal provisions, while insurers may argue that some provisions limit their ability to investigate claims, challenge charges, or use preferred repair networks. The direct-pay rules and restrictions on insurer-selected repair practices are also likely to be debated.