The New York State Assembly has passed legislation that, it said in a statement, “would help reform the arduous recovery and rebuilding process in the wake of widespread damages caused by” Superstorm Sandy. The bills would establish a homeowner's bill of rights, reform the insurance process “to make it more timely and efficient,” and “hold insurance companies to a higher standard of accountability.”
“At a time when so many families and businesses are still struggling to rebuild from Sandy, I hear far too often about the painstaking, complex processes so many people have had to go through to even get their insurance companies on the phone, let alone begin filing claims or receiving any actual assistance,” Assembly Speaker Sheldon Silver said. “Community members should be able to focus on recovery without the additional burden of dealing with unresponsive, unreliable or overwhelmed insurance companies. This legislative package reforms multiple aspects of the lengthy insurance process, but most importantly, it ensures that insurance companies are accountable to the homeowners and businesses they represent.”
The bills, which would need to be approved by the New York Senate and then signed by Governor Andrew Cuomo before becoming law, would:
- create a Homeowner's Bill of Rights (A.2287-A) that would, among other things, provide consumers with “easy-to-understand disclosure notices” detailing their coverage in the event of a disaster, identify whether or not they reside in a flood zone, and require the Department of Financial Services (“DFS”) to establish a Consumer's Guide on Insuring Against Catastrophic Loss;
- require that the DFS establish standards for hurricane windstorm deductibles to create uniformity in their operations with respect to the triggering storm (A.2729);
- standardize the definitions of terms and phrases commonly used in homeowner's and certain commercial insurance policies (A.7453); and
- require insurers, agents, and brokers to provide potential customers with copies of homeowners and certain commercial insurance policies prior to the policy being purchased (A.7454).
In addition, A.1092-A would establish requirements for insurers to investigate disaster claims and require that they accept or reject potential claims within 15 business days of concluding the investigation; this bill would “lay out specific claim investigation and settlement standards to ensure timely responses, investigations and settlements from insurance companies,” according to the Assembly's statement.
The bills also would:
- establish an expedited process for lawsuits against insurance companies that stemmed from a declared disaster or emergency (A.5570); and
- create a private right of action for unfair claim settlement practices when the claim arose from a declared disaster or emergency (A.5780).
In addition, the bills passed by the Assembly would:
- restrict the number of homeowner's policies an insurance company could decide not to renew to four percent of each rating area while also permanently granting the New York Property Insurance Underwriting Association (“NYPIUA”) the authority to expand into additional markets (A.6913);
- prohibit an insurer from refusing to pay for damages caused by a covered event solely because a flood occurred simultaneously with or was a contributing factor in the covered event, and mandate that insurers that included anti-concurrent causation clauses in their policies state in what situations those clauses would apply (A.7455-A); and
- prohibit insurers from denying business interruption claims for losses that were covered under the policy because those losses were caused by something that was excluded from coverage currently, such as flooding (A.7452-A).
Finally, the bills also would:
- provide for discounts on fire and homeowners insurance after completion of a residential home safety and loss prevention course approved by the DFS (A.1475-A);
- require the DFS to – following a declared disaster – prepare a report card with detailed information on how property/casualty insurers responded to the disaster (A.7456); and
- establish a task force comprised of the DFS, the Division of Homeland Security and Emergency Services, insurance industry representatives, local disaster response officials, adjusters, and consumer groups to examine how insurers respond to disasters (A.1093).
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].