N.Y. Insurance Law § 2601: Unfair claim settlement practices; penalties

§ 2601. Unfair claim settlement practices; penalties. (a) No insurer

doing business in this state shall engage in unfair claim settlement

practices. Any of the following acts by an insurer, if committed without

just cause and performed with such frequency as to indicate a general

business practice, shall constitute unfair claim settlement practices:

(1) knowingly misrepresenting to claimants pertinent facts or policy

provisions relating to coverages at issue;

(2) failing to acknowledge with reasonable promptness pertinent

communications as to claims arising under its policies;

(3) failing to adopt and implement reasonable standards for the prompt

investigation of claims arising under its policies;

(4) not attempting in good faith to effectuate prompt, fair and

equitable settlements of claims submitted in which liability has become

reasonably clear, except where there is a reasonable basis supported by

specific information available for review by the department that the

claimant has caused the loss to occur by arson. After receiving a

properly executed proof of loss, the insurer shall advise the claimant

of acceptance or denial of the claim within thirty working days;

(5) compelling policyholders to institute suits to recover amounts due

under its policies by offering substantially less than the amounts

ultimately recovered in suits brought by them;

(6) failing to promptly disclose coverage pursuant to subsection (d)

or subparagraph (A) of paragraph two of subsection (f) of section three

thousand four hundred twenty of this chapter;

(7) submitting reasonably rendered claims to the independent dispute

resolution process established under article six of the financial

services law; or

(8) artificially deflating or otherwise lowering cost data used for

adjusted claims, or using cost data that is not appropriate for the

region of the state where the loss occurred; this shall include but is

not limited to claims adjusted by a person issued a temporary permit

pursuant to subsection (n) of section two thousand one hundred eight of

this chapter.

(b) Evidence as to numbers and types of complaints to the department

against an insurer and as to the department's complaint experience with

other insurers writing similar lines of insurance shall be admissible in

evidence in any administrative or judicial proceeding under this section

or article twenty-four or seventy-four of this chapter, but no insurer

shall be deemed in violation of this section solely by reason of the

numbers and types of such complaints.

(c) If it is found, after notice and an opportunity to be heard, that

an insurer has violated this section, each instance of noncompliance

with subsection (a) hereof may be treated as a separate violation of

this section for purposes of ordering a monetary penalty pursuant to

subsection (b) of section one hundred nine of this chapter. A violation

of this section shall not be a misdemeanor.