Bill Summary – FastDemocracy

68th Legislature                                                                                                      SB 165.1
                                                   SENATE BILL NO. 165
                                               INTRODUCED BY B. USHER
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   A BILL FOR AN ACT ENTITLED: “AN ACT ESTABLISHING A DUTY OF COOPERATION OF AN INSURED
   OR A THIRD-PARTY CLAIMANT TOWARD AN INSURER WHEN DEALING WITH CLAIMS AND SEEKING
   RECOVERY OF BENEFITS UNDER AN INSURANCE POLICY; PROVIDING THAT A BREACH OF THE
   DUTY MAY BE ASSERTED BY AN INSURER AS AN AFFIRMATIVE DEFENSE TO ANY CAUSE OF ACTION
   AGAINST AN INSURER UNDER SECTION 33-18-242, MCA, OR COMMENCED BY AN INSURED OR
   CLAIMANT THAT ALLEGES THE INSURER'S BREACH OF CONTRACT OR THE INSURER'S BREACH OF
   THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING; ALLOWING AN INSURER TO
   INTRODUCE EVIDENCE CONCERNING AN INSURED'S OR THIRD-PARTY CLAIMANT'S CONDUCT IN
   ANY CAUSE OF ACTION AGAINST AN INSURER UNDER SECTION 33-18-242, MCA, OR THAT ALLEGES
   THE INSURER'S BREACH OF CONTRACT OR THE INSURER'S BREACH OF THE IMPLIED COVENANT
   OF GOOD FAITH AND FAIR DEALING; AMENDING SECTION 33-18-242, MCA; AND PROVIDING AN
   IMMEDIATE EFFECTIVE DATE.”
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              WHEREAS, it is the public policy of this state that, when liability is reasonably clear and insurance
   coverage exists, the prompt, fair, and equitable settlement of insurance claims are encouraged as beneficial to
   claimants, policyholders, insurers, and all citizens of this state; and
              WHEREAS, this public policy benefits the citizens of this state because it promotes prompt, fair, and
   equitable settlements of insurance claims and reduces the nature, extent, and duration of costly litigation in the
   courts of this state; and
              WHEREAS, this public policy is not promoted when an insured or a third-party claimant fails to act fairly
   toward an insurer and fails to cooperate when making, reporting, presenting, or delivering insurance claims or
   settlement demands to insurers; and
              WHEREAS, it is the public policy of this state that both insured policyholders and insurers doing
   business in this state are entitled to a fair and reasonable opportunity to fairly investigate and evaluate
   insurance claims based on reasonably available and supporting documents, records, and information regarding
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68th Legislature                                                                                                     SB 165.1
   the insurance claim.
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   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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              NEW SECTION. Section 1.      Insured and third-party claimant's duties -- affirmative defense. (1)
   An insured or a claimant shall cooperate with an insurer with respect to an insurance claim or cause of action
   made or asserted against an insured, insurer, or both, or reported or delivered to an insurer under an insurance
   policy issued by the insurer. The duty to cooperate includes, in addition to other duties specified in the
   insurance policy, the duty to comply with the reasonable requests of the insurer in the investigation and
   handling of the insurance claim.
              (2)   An insured or a claimant shall deliver claim information to the insurer to allow the insurer a fair
   and reasonable opportunity to investigate and evaluate each claim made against an insured, insurer, or both, or
   reported or delivered to an insurer under an insurance policy issued by the insurer.
              (3)   A breach of any of the duties of an insured or claimant set forth in this section does not create
   a separate or independent cause of action against an insured or claimant, but the breach of a duty may be:
              (a)   considered as evidence regarding whether the insurer had an opportunity to conduct a
   reasonable investigation based on the reasonably available claim information and whether the insurer had a
   reasonable basis in law or in fact for contesting the claim or the amount of the claim; and
              (b)   asserted by an insurer as an affirmative defense to a cause of action commenced by an
   insured or claimant under 33-18-242 or commenced by an insured or claimant that alleges the insurer's breach
   of contract or the insurer's breach of the implied covenant of good faith and fair dealing.
              (4)   An insurer may introduce any evidence otherwise admissible in a civil action in the state
   regarding the actions, inactions, and other conduct of an insured or claimant in a civil action commenced by an
   insured or claimant with respect to a claim or cause of action under 33-18-242 or commenced by an insured or
   claimant that alleges the insurer's breach of contract or the insurer's breach of the implied covenant of good
   faith and fair dealing.
              (5)   For the purposes of this section, the following definitions apply:
              (a)   (i) "Claim information" means documents, records, or information created, maintained, or
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68th Legislature                                                                                                       SB 165.1
   stored in a media format that is reasonably available to an insured or claimant and that relates to, establishes,
   or proves:
              (A)    damages of any kind or nature relating to the claim or cause of action against the insured,
   insurer, or both; and
              (B)    the liability of the insured, insurer, or both to pay, satisfy, or otherwise compensate for the
   damages as provided in subsection (5)(a)(i)(A).
              (ii)   The term includes information that is reasonably available to an insured or a third-party
   claimant only if the claim information is in the possession of the insured or third-party claimant, or their
   representatives or attorneys, or if the claim information can be reasonably obtained by the insured or third-party
   claimant on request.
              (b)    "Claimant" means a third-party claimant making, alleging, or pursuing an insurance claim or
   cause of action against an insured for damages, or against an insurer pursuant to 33-18-242, together with and
   including an attorney or any other authorized representative acting for or on behalf of the third-party claimant or
   any assignee of a third-party claimant.
              (c)    "Insured" means an insured individual or entity insured under an insurance policy against
   whom a third-party claimant is making, alleging, or pursuing an insurance claim or cause of action for damages,
   or an insured individual or entity making, alleging, or pursuing a claim or cause of action arising from or related
   in any manner to the insurance policy issued by the insurer to the insured, together with and including an
   attorney or any other authorized representative acting for or on behalf of an insured or any assignee of an
   insured.
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              Section 2. Section 33-18-242, MCA, is amended to read:
              "33-18-242. Independent cause of action -- burden of proof. (1) An insured or a third-party
   claimant has an independent cause of action against an insurer for actual damages caused by the insurer's
   violation of subsection (1), (4), (5), (6), (9), or (13) of 33-18-201(1), (4), (5), (6), (9), or (13).
              (2)    In an action under this section, a plaintiff is not required to prove that the violations were of
   such frequency as to indicate a general business practice.
              (3)    An insured who has suffered damages as a result of the handling of an insurance claim may
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68th Legislature                                                                                                        SB 165.1
   bring an action against the insurer for breach of the insurance contract, for fraud, or pursuant to this section, but
   not under any other theory or cause of action. An insured may not bring an action for bad faith in connection
   with the handling of an insurance claim.
              (4)      A third-party claimant who has suffered damages as a result of the handling of an insurance
   claim may bring an action for fraud or pursuant to this section, but not under any other theory or cause of
   action. A third-party claimant may not bring an action for bad faith in connection with the handling of an
   insurance claim.
              (4)(5)   In an action under this section, the court or jury may award such damages as were proximately
   caused by the violation of subsection (1), (4), (5), (6), (9), or (13) of 33-18-201(1), (4), (5), (6), (9), or (13).
   Exemplary damages may also be assessed in accordance with 27-1-221.
              (5)(6)   An insurer may not be held liable under this section if the insurer had a reasonable basis in law
   or in fact for contesting the claim or the amount of the claim, whichever is in issue.
              (6)(7)   (a) An insured may file an action under this section, together with any other cause of action the
   insured has against the insurer. Actions may be bifurcated for trial where justice so requires.
              (b)      A third-party claimant may not file an action under this section until after the underlying claim
   has been settled or a judgment entered in favor of the claimant on the underlying claim.
              (7)(8)   The period prescribed for commencement of an action under this section is:
              (a)      for an insured, within 2 years from the date of the violation of 33-18-201; and
              (b)      for a third-party claimant, within 1 year from the date of the settlement of or the entry of
   judgment on the underlying claim.
              (8)(9)   As used in this section, an insurer includes a person, firm, or corporation utilizing self-insurance
   to pay claims made against them."
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              NEW SECTION. Section 2.         Codification instruction. [Section 1] is intended to be codified as an
   integral part of Title 33, chapter 18, part 2, and the provisions of Title 33, chapter 18, part 2, apply to [section 1].
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              NEW SECTION. Section 3.         Saving clause. [This act] does not affect rights and duties that matured,
   penalties that were incurred, or proceedings that were begun before [the effective date of this act].
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68th Legislature                                                                                                SB 165.1
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              NEW SECTION. Section 4.   Effective date. [This act] is effective on passage and approval.
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Statutes affected: 
SB0165_1.pdf: 33-18-242
SB0165_2.pdf: 33-18-242
SB0165_X.pdf: 33-18-242
Amended: 33-18-242
Introduced: 33-18-242