by: Vincent Capaldi
In our ongoing effort to keep our clients and business partners up to date on matters that affect their insurance programs, Bay Oaks Group is providing the following update on an important new piece of legislation that will have an immediate impact on most of our New York clients.
On 12/31/21, New York Governor Hochul signed the Comprehensive Insurance Disclosure Act (CIDA) into law. This law requires defendants in personal injury cases to disclose insurance policies and supporting documentation that may cover the plaintiff’s alleged injuries. Presumably, the intent of the law is to allow the plaintiff access to the defendant’s coverage information so plaintiffs can more accurately tailor (and increase) their demands in cases that may be subject to coverage under a defendant’s insurance policy.
Objectively, the new CIDA law imposes additional administrative burdens on defendants and their defense counsels in personal injury cases which will likely lead to higher defense costs. In addition, the required disclosure of all available insurance coverages and limits could ultimately lead to higher settlements, verdicts, and awards. When insurance carriers see increased claims costs in specific jurisdictions or on specific coverage lines, they typically respond by reducing coverage limits, increasing deductibles and retentions, and/or increasing premiums.
A full copy of the CIDA legislation is available for review on the following link: NY State Senate Bill S7052 (nysenate.gov). The major provisions of the legislation are as follows:
- Defendants are required to provide plaintiffs with complete copies of all insurance policy and coverage documents including declarations pages, insuring agreements, endorsements, and other supporting documents as well as the insurance application.
- The law applies to claims filed on or after 1/1/22 as well as any open or pending claims:
- For any open or pending claims prior to 1/1/22, defendants must provide copies of insurance policies and other documents to the plaintiff as outlined above no later than 3/1/22.
- For any claims filed on or after 1/1/22, the defendant must provide coverage documents to the plaintiff within 60 days of providing a response to the claim.
- Documents that must be disclosed include primary, excess and umbrella policies as well as coverage documents and policies related to any individual and/or group self-insurance programs that may provide coverage to the defendant for the case in question.
- The defendant must provide the plaintiff with contact information for all other plaintiff attorney(s) representing other claimants whose claims may also be covered under the policy(s) in question – even if unrelated to the case in question.
- The defendant must provide regular updates to the plaintiff on any new or pending claims that may affect the coverage limits available on the claim in question. For example:
- If a policy is subject to an aggregate coverage limit, the policyholder must disclose any reduction or potential reduction in available policy limits from other claims filed against the policy or policies.
- If defense costs erode the coverage limits available to the policyholder, the defendant must notify the plaintiff of any prior defense costs incurred that would reduce the available defense cost coverage limit available to the plaintiff for the claim in question.
- The defendant is required to update all plaintiffs periodically and up to 60 days after the conclusion of the plaintiff’s case of any new claims, developments in existing claims and/or any other events that could potentially impact the coverage available for those claims.
- The defendant must provide the plaintiff with contact information (name, address, phone number, email address, etc.) for the claims adjuster(s) or individual(s) handling the plaintiff’s claim. This includes carrier staff adjusters, TPA adjusters and/or adjusters working on behalf of any group self-insurance plan that may provide coverage for the defendant.
- The defendant and their defense counsel must certify to the plaintiff the insurance information provided is accurate and up to date.
Although the bill was signed into law, the Governor offered a red-lined version of the regulations with the following recommended revisions:
- Extend disclosure deadline from 60 to 90 days.
- Remove requirement to disclose the insurance application.
- Limit disclosure of policy documents to only those that apply to the plaintiff’s claim.
- Require defendant to supply only the name of the adjuster(s) assigned to the claim (not phone, address, email, etc.).
The Governor indicated there was support in the NY legislature for her recommended revisions but as of the writing of this article, those proposed revisions have not been formally adopted into law. While we await potential updates and revisions to CIDA, Bay Oaks recommends you:
- Consult with your insurance professionals to make sure copies of any required policy documents that may apply to any pending cases are available.
- Coordinate with defense counsel to make sure they have access to coverage documents if needed.
- Review any insurance application documents with your insurance professionals and defense counsel prior to submitting to the plaintiff. Some applications may include confidential information that should not be disclosed to third parties.
We will continue to provide updates on any future changes to this legislation as well as any others that may affect your insurance program. If you have any questions on this new law and how it may affect you or your clients in the interim, please contact any member of the Bay Oaks team.