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BILL AS INTRODUCED 2007-2008

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H.495

Introduced by Representative    Marek of Newfane

Referred to Committee on

Date:

Subject:  Banking and insurance; insurance trade practices

Statement of purpose:  This bill proposes to specify first and third party rights of action for cases relating to unfair claim settlement practices of insurers.

AN ACT RELATING TO UNFAIR CLAIM SETTLEMENT PRACTICES RIGHTS OF ACTION

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  8 V.S.A. § 4724(9) is amended to read:

(9)  Unfair claim settlement practices.

(A)  Committing or performing with such frequency as to indicate a business practice any of the following if committed without just cause and not inadvertently or accidentally:

(A)(i)  misrepresenting pertinent facts or insurance policy provisions relating to coverage at issue;

(B)(ii)  failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;

(C)(iii)  failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;

(D)(iv)  refusing to pay claims without conducting a reasonable investigation based upon all available information;

(E)(v)  failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;

(F)(vi)  not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear;

(G)(vii)  attempting to settle a claim for less than the amount to which a reasonable man individual would have believed he or she was entitled by reference to written or printed advertising material accompanying or made a part of the application;

(H)(viii)  attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured;

(I)(ix)  making claim payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are made;

(J)(x)  making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;

(K)(xi)  delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;

(L)(xii)  failing to promptly settle claims where liability has become reasonably clear under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;

(M)(xiii)  failing to promptly provide a reasonable explanation on the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.

(B)  For violations of this subdivision (9), any person may bring a civil action against an insurer when such person is damaged.  A court or jury may award damages as were proximately caused by the violation.  An insurer may not be held liable if the insurer had a reasonable basis in law or in fact for contesting the claim or the amount of the claim, whichever is at issue.  A third party claimant may not file an action until after the underlying claim has been settled or a judgment entered in favor of the claimant on the underlying claim. Costs shall be awarded to the prevailing party unless the court directs otherwise.

(C)  Evidence as to numbers and types of complaints to the department of banking, insurance, securities, and health care administration against an insurer, and the department’s complaint experience with other insurers writing similar lines of insurance, shall be admissible in evidence in an administrative or judicial proceeding brought pursuant to this subdivision (9), provided that no insurer shall be deemed in violation of this subdivision (9) solely by reason of the numbers and types of such complaints.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us