New York Insurance Claim Settlement Timelines and Penalties

New York State law establishes strict timelines for insurance companies to process claims and outlines penalties for non-compliance. These regulations aim to protect policyholders and ensure timely resolution of insurance disputes. This article details the requirements for claim settlements, potential penalties for insurers, and available avenues for policyholder recourse.

Claim Settlement Timeline

Under New York law, insurers are required to act promptly on claims filed by insured parties. Specifically, within 30 days of receiving a notice of claim, the insurer must either:

• Issue a determination of coverage – either accepting or denying the claim – and, if coverage is accepted, provide a good faith offer to settle the claim.
• Notify the insured in writing that additional information is needed to complete the claim review. This notice must clearly specify the additional items required.

Upon receiving the requested information from the insured, the insurer must then comply with the initial 30-day requirement to issue a coverage determination and settlement offer.

Penalties for Non-Compliance

Insurers that fail to adhere to these timelines face financial penalties. A penalty of $250 per day will be levied against the insurer, payable to the insured party, for each day of non-compliance. This penalty is in addition to any other remedies available to the insured, such as a civil lawsuit.

Policyholder Recourse: Filing a Complaint

Insured parties who believe an insurer has violated these regulations can file a written complaint with the New York State Department of Business Regulation (DBR). The DBR will investigate the complaint, and if a violation is found, the director (or their designee) can order the insurer to make payment to the insured party within 14 days.

Preservation of Legal Rights

It’s key to note that these regulations do not limit an insured party’s right to pursue a civil action against the insurer for breach of contract or terrible faith. The provisions do not affect the insured’s ability to recover compensatory damages, punitive damages, or costs and expenses through legal action.

Effective Date

These amendments to the New York Insurance Law took effect upon passage.

Key Takeaways

• New York insurers have 30 days to respond to claims.
• Penalties for late responses are $250 per day.
• Policyholders can file complaints with the DBR.
• Legal rights remain unaffected by these regulations.