New Insurance Law Section 3407A
April, 2002
A new statute in the New York Insurance Law which affects both casualty and property insurers went into effect on March 18, 2002. This new statute – Insurance Law Section 3407A – requires property and casualty insurers issuing policies on risks located or resident in New York insuring against damage to the insured’s real property to include a provision regarding an insurer’s written estimate of property losses. This provision must, at a minimum, give the insured notice that, in the event of a claim for damages to real property, the insurer must, upon request, give the insured or its representative a copy of the insurer’s written estimate of loss damages if the insurer has independently prepared one or had one prepared on its behalf for its own purposes. The written estimate must include a specification of all appropriate deductions and must be given to the insured within thirty (30) days of the request or the estimate’s preparation, whichever is later. However, Section 3407A does not require an insurer to provide an estimate unless it has independently prepared one or had one prepared on its behalf for its own purposes.
Pursuant to New York state regulation, insurers are already required to provide claimants with the insurer’s written estimate on property loss or damage on motor vehicle claims, but not on real property coverage claims. Section 3407A was enacted to allow for discussion of the details of the scope and loss allowances made by a carrier with an eye toward prompting good faith settlement negotiations on real property claims.
Learning Point:
All policies issued or renewed on New York risks insuring against damage to the insured’s real property must contain either the provision set forth in Section 3407A or a provision more favorable to the insured. As such, prior to making any written estimates on loss damages, the insurer should make sure that a thorough investigation is completed and all estimates are carefully and finally prepared because they will be available to the insured and may be used as a bargaining tool in the insured’s favor. Moreover, while this law may appear to be applicable only to New York risks, many policies insure multiple locations in different states. Thus, the law may reach outside of New York. We will monitor this developing area of the law and update our readers as new developments occur.
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