View Bill Status
View Bill Text
View Statement of Purpose / Fiscal Impact
H0520...........................................................by BUSINESS INSURANCE - Amends existing law relating to insurance trade practice and fraud to provide additional duties of insurers of real property; to revise unfair claims settlement practices; to revise penalties for unfair claims settlement practices; and to provide for damages, unreasonable costs and attorney's fees in the event of litigation. 02/12 House intro - 1st rdg - to printing 02/13 Rpt prt - to Bus
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 520 BY BUSINESS COMMITTEE 1 AN ACT 2 RELATING TO INSURANCE TRADE PRACTICE AND FRAUDS; AMENDING SECTION 41-1328, 3 IDAHO CODE, TO PROVIDE ADDITIONAL DUTIES OF INSURERS OF REAL PROPERTY; 4 AMENDING SECTION 41-1329, IDAHO CODE, TO REVISE UNFAIR CLAIMS SETTLEMENT 5 PRACTICES AND TO MAKE A TECHNICAL CORRECTION; AND AMENDING SECTION 6 41-1329A, IDAHO CODE, TO REVISE PENALTIES FOR UNFAIR CLAIMS SETTLEMENT 7 PRACTICES AND TO PROVIDE FOR DAMAGES, REASONABLE COSTS AND ATTORNEY'S FEES 8 IN THE EVENT OF LITIGATION. 9 Be It Enacted by the Legislature of the State of Idaho: 10 SECTION 1. That Section 41-1328, Idaho Code, be, and the same is hereby 11 amended to read as follows: 12 41-1328. PAYMENT OF CLAIMS BY INSURERS. (1) Every insurer issuing a motor 13 vehicle insurance policy, as defined in chapter 5, title 41, Idaho Code, 14 shall, in the event of damage to a covered motor vehicle by collision and the 15 election by the insurer to have such motor vehicle repaired, make payment by 16 check or draft, payable to the repairer or to the named insured and the 17 repairer, jointly, no later than twenty (20) days subsequent to receipt of an 18 itemized bill or invoice covering repairs authorized by the insurer which have 19 been satisfactorily completed. 20 (2) Every insurer of real property as defined in section 41-504, Idaho 21 Code, shall, in the event of damage to a covered property and the acceptance 22 of coverage by the insurer, make payment by check or draft payable to: (a) the 23 damage repair prime contractor or other claims service provider designated by 24 the policyholder or claimant to receive claims disbursements; or (b) the 25 named policyholder and the damage repair prime contractor, jointly, no later 26 than thirty (30) days subsequent to receipt of the damage repair prime 27 contractor's itemized invoice covering repairs which have been satisfactorily 28 completed and accepted as attested by the policyholder. 29 SECTION 2. That Section 41-1329, Idaho Code, be, and the same is hereby 30 amended to read as follows: 31 41-1329. UNFAIR CLAIMS SETTLEMENT PRACTICES. Pursuant to section 41-1302, 32 Idaho Code, committing or performing any of the following acts or omissions 33 intentionally, or with such frequency as to indicate a general business prac- 34 tice shall be deemed to be an unfair method of competition or an unfair or 35 deceptive act or practice in the business of insurance: 36 (1) Misrepresenting pertinent facts or insurance policy provisions relat- 37 ing to coverages at issue including failing to provide to the claimant within 38 three (3) business days of the initial claim report a comprehensive explana- 39 tion of coverage and services available under the policy contract accompanied 40 by instructions for obtaining all benefits available under the policy 41 contract; 2 1 (2) Failing to acknowledge and act reasonably promptly upon communica- 2 tions with respect to claims arising under insurance policies; 3 (3) Failing to adopt and implement reasonable standards for the prompt 4 investigation of claims arising under insurance policies; 5 (4) Refusing to pay claims without conducting a reasonable investigation 6 based upon all available information; 7 (5) Failing to affirm or deny coverage of claims within a reasonable time 8 after proof of loss statements have been completed; 9 (6) Not attempting in good faith to effectuate prompt, fair and equitable 10 settlements of claims in which liability has become reasonably clear; 11 (7) Compelling insureds to institute litigation to recover amounts due 12 under an insurance policy by offering substantially less than the amounts 13 ultimately recovered in actions brought by such insureds; 14 (8) Attempting to settle a claim for less than the amount to which a rea- 15 sonable man would have believed he was entitled by reference to written or 16 printed advertising material accompanying or made part of an application; 17 (9) Attempting to settle claims on the basis of an application which was 18 altered without notice to, or knowledge or consent of the insured; 19 (10) Making claims payments to insureds or beneficiaries not accompanied 20 by a statement setting forth the coverage under which the payments are being 21 made; 22 (11) Making claims payments to a policyholder or beneficiary after having 23 been notified by the insurer of assignment of claims payment rights to a dam- 24 age repair service provider by the insured; 25 (12) Making known to insureds or claimants a policy of appealing from 26 arbitration awards in favor of insureds or claimants for the purpose of com- 27 pelling them to accept settlements or compromises less than the amount awarded 28 in arbitration; 29 (123) Delaying the investigation or payment of claims by requiring an 30 insured, claimant, or the physician of either to submit a preliminary claim 31 report and then requiring the subsequent submission of formal proof of loss 32 forms, both of which submissions contain substantially the same information; 33 (134) Failing to promptly settle claims, where liability has become rea- 34 sonably clear, under one portion of the insurance policy coverage in order to 35 influence settlements under other portions of the insurance policy coverage; 36or37 (145) Failing to promptly provide a reasonable explanation of the basis in 38 the insurance policy in relation to the facts or applicable law for denial of 39 a claim or for the offer of a compromise settlement; 40 (16) Failing to disclose and describe any business relationship of the 41 insurer with providers of materials or services that are used in providing 42 claim-related services; 43 (17) Failing to credit to a policyholder's account or required deductible 44 expense any financial considerations received by the insurer pursuant to the 45 policyholder's claim; 46 (18) Failing to permit free and unfettered choice by the policyholder of 47 any service provider or providers for property insurance claims; 48 (19) Attempting to compel a policyholder's election of any damaged prop- 49 erty service provider or providers through misrepresentation, intimidation, 50 compulsion, or by any other means not specifically allowed by the insurance 51 contract; or 52 (20) Attempting to compel service providers to utilize nonstandard mate- 53 rials or methods or to circumvent requirements of federal, Idaho or local 54 rules or regulations in performance of property claims services. 3 1 SECTION 3. That Section 41-1329A, Idaho Code, be, and the same is hereby 2 amended to read as follows: 3 41-1329A. UNFAIR CLAIMS SETTLEMENT PRACTICES -- PENALTY. The director, if 4 he finds after a hearing, that an insurer has violated the provisions of sec- 5 tion 41-1329, Idaho Code, may, in his discretion, impose an administrative 6 penalty not to exceed the greater of ten thousand dollars ($10,000) or an 7 amount equal to three (3) times the combined amounts found to be in violation 8 to be deposited by the director as provided in section 41-406, Idaho Code, and 9 may, in addition to the fine, or in the alternative to the fine, refuse to 10 continue or suspend or revoke an insurer's certificate of authority. In the 11 event of litigation relating to a property insurance contract, the prevailing 12 party shall be entitled to damages as determined by the court plus reasonable 13 costs and attorney's fees.
STATEMENT OF PURPOSE
RS 17789 C1
This legislation provides amendments to Idaho State Code 41-1329
regarding insurer practices arising out of claims adjustment and
settlement practices that will assure compliance by insurers with
policy contract including disclosure of relevant business
relationships of the insurer while concurrently providing
enhanced competition in the provision of property damage repair
and rebuilding services through policyholder choice of service
provider. Amendments to 41-1328 will facilitate expedited project
completion times and contractor compensation. The small
businesses that provide property damage restoration services will
be able to more quickly reach agreement with claims managers on
scope and service prices. Amendments to 41-1328 increase the
penalties to insurers whose practices undermine the legislative
intent of the bill.
FISCAL NOTE
There will be no fiscal impact to the general fund.
Contact
Name: Representative Wendy Jaquet
Phone: (208) 332-1130
STATEMENT OF PURPOSE/FISCAL NOTE H 520