Bill > SB0074

This bill establishes new requirements for handling third-party liability claims related to motor vehicle accidents, specifically when a claimant demands the full policy limits from an insurance carrier in exchange for releasing claims. A claimant's demand letter must now include enough information for the insurance carrier to evaluate the claim, such as details about the incident, injuries, liability, and damages, along with supporting medical records and bills, and the carrier will have at least 30 days to respond. If the insurance carrier declines the demand and the claimant decides to communicate directly with an unrepresented insured, this communication must be in writing, sent to the carrier, and include a reference to this new law, a plain-language explanation of the claim, a copy of the original demand letter, and potentially the carrier's response. The claimant generally cannot file a lawsuit against the insured until 45 days after the insured receives this correspondence, and if the claimant seeks damages exceeding the policy limits, the correspondence must inform the insured of their right to review all claim documents with their carrier and discuss potential excess judgments with their carrier or independent legal counsel. Within 30 days of receiving a copy of the correspondence with the insured, the insurance carrier must provide the insured with a written disclosure stating whether they will defend and indemnify the insured, and if indemnification is limited to policy limits, the carrier must explain the reason and inform the insured of their right to seek independent legal advice. These disclosures are intended to clarify the carrier's position and do not alter policy coverage, but the bill also clarifies that compliance with these procedures does not prevent a finding of bad faith if the carrier's substantive decisions were unreasonable, and it supplements existing laws regarding the duty of good faith and fair dealing without creating new private causes of action.