BILL NUMBER: S5583
SPONSOR: LANZA
 
TITLE OF BILL:
An act to amend the insurance law, in relation to creating a homeowners'
bill of rights and a consumer guide on insuring against catastrophic
loss caused by natural disasters
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to establish a Homeowners' Bill of Rights
that would educate consumers about the details of their insurance poli-
cies and their rights under the law.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill would amend the Insurance law by adding a new
section 3444-a, the "Homeowners Bill of Rights." This section would
obligate certain insurers to provide to insured or potentially insured
parties written disclosures describing: coverage or limitations on
coverage for losses caused by certain catastrophic occurrences, informa-
tion related to claims investigation and processing, the rights of the
insured under the law, that the provisions of the policy could be modi-
fied or changed pursuant to state or federal law following a disaster or
emergency, the insurer's contact information, information on obtaining
the Consumer's Guide on Insuring Against Catastrophic Losses, and any
other information deemed necessary by the Superintendent. In addition,
when the insured's policy does not include coverage for certain
catastrophic occurrences, the insurer would be required to provide
information on additional coverage options.
Section 2 of the bill would amend Section 2601 of the insurance law to
include a new paragraph (7). This paragraph would state that the knowing
misrepresentation of or failure to provide pertinent facts of policy
provisions to claimants, and the failure to comply with those policy
provisions, shall constitute an unfair claim settlement practice.
Section 3 of the bill would add a new section 338 to the Insurance law.
This section would instruct the Superintendent to create a Consumer's
Guide on Insuring Against Catastrophic Losses, and outlines the informa-
tion which the Superintendent must include in the Guide. The Guide would
include the ways in which certain occurrences can cause catastrophic
losses, the types of insurance that provide coverage against catastroph-
ic losses, information on which type of weather, and natural disasters.
Other occurrences and catastrophic losses are typically excluded from
insurance policies but it will include how a consumer may obtain cover-
age for those exclusions, steps a consumer can-take to prepare for a
natural disaster (or other catastrophic loss), steps a consumer can take
to facilitate the timely processing of an insurance claim, an explana-
tion of policyholder's rights in law and regulation, and a department
toll-free consumer hotline and website address through which consumers
may initiate complaints and request general information about insurance.
The department would be able to satisfy these requirements through sepa-
rate or supplemental publications and updates, and the Superintendent
would be required to post the "Consumer Guide on insuring Against
Catastrophic Losses" on the Department's website.
 
JUSTIFICATION:
Following Superstorm Sandy and Tropical Storms Irene and Lee, many poli-
cyholders were surprised that their insurance company either rejected
their claim or offered them a settlement amount that was significantly
lower than the cost of the damages. Many policyholders thought that
their existing insurance policy provided sufficient coverage for water
damage and other catastrophic losses caused by these storms. Often,
there were long delays in the investigation and settlement of claims,
leaving home and business owners in limbo for weeks, sometimes months.
It became clear to the victims of these storms that insurance policies
can be complex, the claims process can be burdensome for the policyhold-
er, and insurance companies can be unresponsive at a time when assist-
ance is needed the most. Policyholders should be made aware of the
different insurance coverage options available, the benefits of each
option, and their rights under the law.
This bill would address these issues by requiring insurers to provide
insureds and prospective insureds with a notice containing a Homeowners'
Bill of Rights. The notice would inform consumers of the coverage
provided and any exclusions, how they can obtain additional coverage,
their rights under the law, and other information that will educate
consumers about their insurance coverage. This will ensure that policy-
holders have coverage that meets their needs.
 
PRIOR LEGISLATIVE HISTORY:
2024: S.4184 - Referred to Insurance
2023: S.4184 - Referred to Insurance
2022: S.4977 - Referred to Insurance / A.6981 - Referred to Insurance
2021: S.4977 - Referred to Insurance / A.6981 - Referred to Insurance
2020: S.3866 Referred to Insurance / A.7300 - Referred to Insurance
2019: S.3866 - Referred to Insurance / A.7300 - Referred to Insurance
2018: S.6166 - Referred to Insurance / A.8552 - Referred to Insurance
2017: S.6166 - Referred to Insurance/ A.8552 - Referred to Insurance
2016: S.4048 - Referred to Insurance
2015: S.4048 - Referred to Insurance
2014: S.3045 - Referred to Insurance
2013: S.3045 - Referred to Insurance
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect on the same date and in the same manner as
section 27 of part H of chapter 60 of the laws of 2014 takes effect.