Lawmakers Introduce Bills to Address Post-Sandy Concerns

Legislators in New York and New Jersey have introduced a number of new bills to address some homeowners insurance- related complaints they have been receiving in the wake of Sandy.

On Jan. 9, New York legislators have introduced a bill that seeks to cap the percentage-based hurricane deductibles for homeowners insurance or dwelling fire personal lines policy in New York State at $1,500. It also seeks to establish that such hurricane deductibles shall only be applicable to losses incurred in windstorms with speeds greater than 125 miles per hour. The bill (S01760/A01222) was introduced by State Senator Kenneth LaValle and Assemblyman Fred Thiele.

Additionally, N.Y. Assembly Speaker Sheldon Silver proposed a bill (A-2287) that would requires insurers to provide property owners with “an easy-to-understand disclosure notice” detailing their coverage in the event of a catastrophic occurrence; how and when to file a claim; their rights if a claim is denied or a settlement offer is insufficient; and where and how to obtain coverage for catastrophic events.

Speaker Silver also announced a second bill (A-1092) that would require insurers to promptly process claims when a disaster strikes. Under the measure, insurers would be required to begin investigating these settlement claims within six days, and notify property owners within 15 days as to whether their claim has been accepted or rejected, including their right to appeal if it has been rejected. If a claim has been accepted, insurers would be required to pay it within three business days.

In New Jersey, the Assembly’s financial institutions and insurance committee gave its preliminary approval on Jan. 14 to a bill (A3642) that would require homeowners insurers to give policyholders a one-page summary of the policy explaining “notable coverages and exclusions under the policy” that are “written in a simple, clear, understandable, and easily readable way.”

The summary would be added to the homeowners insurance consumer information brochure provided to the policyholder when the policy is purchased or renewed. The committee added an amendment to allay the insurance industry’s concern that the one-page summary might create legal vulnerabilities for insurers. The committee tried to address that issue by adding an amendment that says the summary shall explicitly state that it is only guidance.