The bill amends Section 9-1-33 of the General Laws to establish a cause of action for insured individuals against insurers that wrongfully refuse to pay or settle claims under insurance policies. It specifies that insured individuals do not need to demonstrate a breach of contract to pursue claims and introduces the concept of a nonnegotiable chose in action that can be assigned. The bill emphasizes the insurer's duty to conduct reasonable investigations and evaluations of claims, with the potential use of unlicensed individuals as evidence of bad faith.

Additionally, the bill revises the "Unfair Claims Settlement Practices Act" to permit a private cause of action for violations, which was not previously allowed. It defines "unfair claims practices" and outlines specific actions that insurers must avoid, such as assigning unqualified adjusters, failing to account for consequential damages, and not promptly notifying claimants of their appraisal rights. The legislation enhances consumer protections by requiring insurers to account for safety laws when calculating claims and ensuring that only licensed individuals handle claims. It also allows insured individuals to seek civil action for damages resulting from violations, while clarifying that mere negligence or good-faith disputes over coverage do not constitute grounds for action. The bill takes effect upon passage.

Statutes affected:
2311: 9-1-33