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New York's Bad Faith Bill Advances Through Parish Insurance Committee Real Estate Insurance Coverage Blog



Back in June 2018, I blogged about the New Jersey Insurance Fair Conduct Act that passed the Senate and went to church. Unfortunately, many roadblocks (insurance company lobbyists) prevented the bill from continuing by using propaganda to spread lies about the harmful effects of passing it. For the foreseeable future, New Jersey will continue to be one of the most difficult states in the country to prove bad faith given their court's "quite debatable" standard. 1

Hopefully the New York Assembly Bill A5623B (and its Senate companion, S6216A) will change the balance of power in New York's insurance industry. The bill creates a private right to act against all insurers operating in the state of New York after it was shown with overwhelming evidence that the insurer's refusal to pay or unreasonably delayed payment was not justified. It goes on to give some specific examples of unreasonable behavior:

(1

) The policyholder could not be provided with accurate information on policy provisions relating to the coverage concerned.

(2) A prompt and fair settlement of a claim or any part thereof could not be effected, and the insurer failed with reasonable regard to at least equal or more favorable compensation to the insured interest as it did to its own interests, and thereby subjecting the insured to a judgment that exceeds the police limits. [19659003] (3) It was not possible to provide a timely written denial of a policyholder's claim with a full and complete explanation of such denial, including references to specific insurance provisions where possible.

(4) Failure to make a final decision and notify the policyholder in writing of his position on both liability for and the insurer's valuation of a claim within six months from the date on which it received actual or constructive notice of the loss which he claims to it is based.

(5) Failure to act in good faith by forcing a policyholder to employ suits to recover amounts due under his policy by offering significantly less than the amounts ultimately recovered in suits worn by such policyholders;

(6) Failure to notify a policyholder that a claim may exceed the insurance limits, that a lawyer assigned by the insurer may be the subject of a conflict of interest or that the policyholder may retain an independent lawyer.

(7) Failure to provide, at the request of the policyholder or their representative, any reports, letters or other documentation arising from the investigation of a claim and the evaluation of liability for or valuation of such a claim.

(8) Refused to pay a claim without making a reasonable inquiry;

(9) Negotiated or settled a claim directly with a policyholder who was known to be represented by a lawyer without the lawyer's knowledge or consent. The provisions of this paragraph shall not be deemed to prohibit routine investigations to a policyholder in order to obtain information about the claim.

(10) Failure to pay for one or more parts of a claim where a consideration of the evidence establishes the claim as liable regardless of whether there are disputes about other parts of the claim where such payment can be made without affecting any of the parties ; or

(11) In violation of section two thousand six hundred one of this article or any regulation issued pursuant to it.

The bill allows interest, costs, payments, compensatory damages, consequential damages, reasonable attorneys' fees, and punitive damages to be recovered. At present, the bill has already passed the insurance committee for the parish and is currently on the floor calendar. Call your local state legislator and senator and ask them to approve this bill.

I leave you with a quote from my boss, Chip Merlin, who said precisely, "understanding the sometimes bizarre method that insurance companies use to assess claims will make your head spin."
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1 Pickett v. Lloyd & # 39; s 131 NJ 457 (1993).


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