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 in bad faith. It specifies that insured individuals are not required to demonstrate a breach of contract to pursue such 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 involvement of unauthorized individuals potentially serving 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 failing to conduct reasonable investigations, misrepresenting facts, depreciating labor costs in claims calculations, and ensuring that only licensed individuals handle insurance claims. The bill allows insured individuals to seek actual damages, attorney fees, and enhanced damages for violations, while clarifying that mere negligence or good-faith disputes do not warrant action. Overall, the legislation aims to strengthen consumer protections and accountability in the insurance industry.

Statutes affected:
7517: 9-1-33