N.Y. Legislation Challenges Anti-Concurrent Causation; Additional Legislation Seeks to Arm Insureds

New legislation in New York, passed by the New York Assembly and moving toward the Senate, would change the way storm claims are processed in the state by forcing insurers to cover flood damage in any future storms. Bill A 7455-A disallows anti-concurrent causation relating to flood damage, which would allow homeowners to receive payments for water or flood damage if they can prove the water was let in by wind or fire damage. The bill would make billions of dollars in claim coverage available to claimants.

A second bill, A 5780, aims to establish a private right of action for unfair insurance settlement practices specifically in cases where a claim arises from a loss or injury in an area that was declared a disaster emergency. This bill would create a statutory claim for bad faith for businesses in New York that currently have no right to action for bad faith practices. The bill arose out of Con Edison’s transformer blow-up, caught on tape and distributed over the internet, but denied by Con Edison.

Two additional pieces of legislation passing through the assembly will shorten the length of time insurers have to settle or dispute a claim, respectively. Bill A 1092A will allow insurers 15 days, with the option of one 15-day extension, to accept or reject a claim, and then requires the insurer provide payment within three days of accepting a claim. The second bill will expedite lawsuits arising out of claims for damages resulting from a state disaster emergency; any claim for damages occurring to property in a disaster area must be announced within thirty days after filing the initial action, and all discovery (identification and reporting of losses) must be completed within 60 days from the date of the first hearing. Insurers would also be forced into a mandatory settlement conference within fourteen days after a note of issue is filed for settlement of claims.
All proposed laws would be applied prospectively, and thus not apply to retroactively to Sandy victims.