New York Legislature Proposes Bill Providing a Private Right of Action for Unfair Settlement Practices
In the wake of Superstorm Sandy, The New York Legislature has introduced a bill that would establish a private right of action against insurers for unfair insurance settlement practices.
Bill No. A05780, introduced on March 6, 2013, amends the state’s insurance law by establishing a private right of action for consumers who have been affected by unfair claims practices for property damage claims in regions where the Governor has declared a disaster emergency.
The bill also provides that courts may, in their discretion, award punitive damages and attorney’s fees where there is a finding of an insurer’s willful or knowing violation of section 2601 of the New York Insurance Law.
In a memorandum accompanying the bill, the drafters provide that “insurers have every right to attempt to lawfully deny claims, but all too often these attempts create unreasonable situations for homeowners attempting to simply access the benefits to which they are entitled. This is especially acute in situations where the homeowner may have lost most or even all of their possessions due to a storm declared emergency.”
The memorandum further provides that the justification for the bill is to “allow insureds to institute claims against their insurers for unfair claims practices proscribed by the Insurance Law” because there has been “evidence that some insurers have taken advantage of insured as concerns the adjusting of losses sustained in disaster emergencies declared by the Governor.”