2025 -- H 6370

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LC002941

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2025

____________

A N   A C T

RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY --

CAUSES OF ACTION

     Introduced By: Representatives Casey, Corvese, and Furtado

     Date Introduced: May 28, 2025

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 9-1-33 of the General Laws in Chapter 9-1 entitled "Causes of

Action" is hereby amended to read as follows:

     9-1-33. Insurer’s bad faith refusal to pay a claim made under any insurance policy.

     (a) Notwithstanding any law to the contrary, an insured under any insurance policy as set

out in the general laws or otherwise may bring an action against the insurer issuing the policy when

it is alleged the insurer wrongfully and in bad faith refused to pay or settle a claim made pursuant

to the provisions of the policy, or otherwise wrongfully and in bad faith refused to timely perform

its obligations under the contract of insurance. In any action brought pursuant to this section, an

insured may also make claim for compensatory damages, punitive damages, and reasonable

attorney fees. In all cases in which there has been no trial in the superior court on or before May

20, 1981, the question of whether or not an insurer has acted in bad faith in refusing to settle a claim

shall be a question to be determined by the trier of fact.

     (b) The provisions of this section shall apply to all actions against insurers which have been

commenced and are pending in any state or federal court on May 20, 1981.

     (c) A cause of action under this section is independent of a breach of contract claim, and

an insured is not required to establish a breach of contract before seeking recovery under this

section.

     SECTION 2. Section 27-5-3 of the General Laws in Chapter 27-5 entitled "Fire Insurance

Policies and Reserves" is hereby amended to read as follows:

27-5-3. Form of standard policy.

     The form of the standard fire insurance policy of the state of Rhode Island, with permission

to substitute for the word “company” or “companies” a more accurate descriptive term for the type

of insurer, shall be as follows:

No

     Space for insertion of name of company or companies issuing the policy and other matter

permitted to be stated at the head of the policy.

     Space for listing amounts of insurance, rates, and premiums for the basic coverages insured

under the standard form of policy and for additional coverages or perils insured under endorsements

attached.

     In consideration of the provisions and stipulations herein or added hereto and of ...............

dollars premium this company, for the term of ……………

      from the ………… day of ………………………………………………, 20 ……

      to the ………… day of ………………………………………………, 20 ………

      at 12:01 a.m. standard time at location of property involved,

to an amount not exceeding ..................... dollars, does insure, .......................... and legal

representatives, to the extent of the actual cash value of the property at the time of loss, but not

exceeding the amount which it would cost to repair or replace the property with material of like

kind and quality within a reasonable time after a loss, without allowance for any increased cost of

repair or reconstruction by reason of any ordinance or law regulating construction or repair, and

without compensation for loss resulting from interruption of business or manufacture, nor in any

event for more than the interest of the insured, against all direct loss by fire and lightning, and by

removal from the premises endangered by the perils insured against in this policy, except as

hereinafter provided, to the property described hereinafter while located or contained as described

in this policy, or pro rata for five (5) days at each proper place to which any of the property shall

necessarily be removed for preservation from the perils insured against in this policy, but not

elsewhere.

     Assignment of this policy shall not be valid except with the written consent of this

company.

     This policy is made and accepted subject to the foregoing provisions and stipulations and

those hereinafter stated, which are hereby made a part of this policy, together with such other

provisions, stipulations, and agreements as may be added hereto, as provided in this policy.

     IN WITNESS WHEREOF, this company has executed and attested these presents;

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     at

     …………………………………

     Secretary President

In the event the domicile state of the company issuing the policy requires a Rhode Island company

to have a countersignature affixed by a licensed resident agent to a policy issued in that state then

in accordance with the provisions of § 27-2-17, the form of the standard fire insurance policy shall

in lieu of the foregoing execution and attestation clause contain the following execution and

attestation clause: IN WITNESS WHEREOF, this company has executed and attested these

presents; but this policy shall not be valid unless countersigned by the duly authorized agent of this

company at

…………………………………

Secretary President

Countersigned this .…………………... day of ……………………………………20 ..………….

Agent

1 Concealment, This entire policy shall be void if, whether

2 fraud. before or after a loss, the insured will-

3 fully concealed or misrepresented any material

4 fact or circumstance concerning this insurance or the subject

5 thereof, or the interest of the insured therein, or in the case of

6 any fraud or false swearing by the insured relating thereto.

7 Uninsurable This policy shall not cover accounts, bills,

8 and excepted currency, deeds, evidences of debt, money, or

9 property. securities; nor, unless specifically named here-

10 on in writing, bullion or manuscripts.

11 Perils not This company shall not be liable for loss by

12 included. fire or other perils insured against in this

13 policy caused, directly or indirectly, by: (a)

14 enemy attack by armed forces, including action taken by mili-

15 tary, naval, or air forces in resisting an actual or an immediately

16 impending enemy attack; (b) invasion; (c) insurrection; (d)

17 rebellion; (e) revolution; (f) civil war; (g) usurped power; (h)

18 order of any civil authority except acts of destruction at the time

19 of and for the purpose of preventing the spread of fire, provided

20 that this fire did not originate from any of the perils excluded

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21 by this policy; (i) neglect of the insured to use all reasonable

22 means to save and preserve the property at and after a loss, or

23 when the property is endangered by fire in neighboring prem-

24 ises; (j) loss by theft.

25 Other Insurance. Other insurance may be prohibited or the

26 amount of insurance may be limited by an

27 endorsement attached hereto.

28 Conditions suspending or restricting insurance. Unless

29 otherwise provided in writing and added hereto this company

or companies shall not

30 be liable for loss occurring:

31 (a) While the hazard is increased by any means within the con-

32 trol or knowledge of the insured; or

33 (b) While a described building, whether intended for occupancy

34 by owner or tenant, is vacant or unoccupied beyond a period of

35 sixty (60) consecutive days or

35A thirty (30) consecutive days subsequent to the date on which an

35B order is issued by the local building inspector pursuant to

§ 23-27.3-124.2,

35C whichever first occurs; or

36 (c) As a result of explosion or riot, unless fire ensues, and in

37 that event for loss by fire only.

38 Other perils Any other peril to be insured against or sub-

39 or subjects. ject of insurance to be covered in this policy

40 shall be by endorsement in writing hereon or

41 added hereto.

42 Added provisions. The extent of the application of insurance

43 under this policy and of the contribution to

44 be made by this company in case of loss, and any other pro-

45 vision or agreement not inconsistent with the provisions of this

46 policy, may be provided for in writing and added hereto, but no

47 provision may be waived except such as by the terms of this

48 policy is subject to change.

49 Waiver No permission affecting this insurance shall

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50 provisions. exist, or waiver of any provision is valid,

51 unless granted herein or expressed in writing

52 and added hereto. No provision, stipulation, or forfeiture shall

53 be held to be waived by any requirement or proceeding on the

54 part of this company relating to appraisal or to any examina-

55 tion provided for herein.

56 Cancellation This policy shall be cancelled at any time

57 of policy. at the request of the insured, in which case

58 this company shall, upon demand and sur-

59 render of this policy, refund the excess of the paid premium

above

60 the customary short rates for the expired time. This pol-

61 icy may be cancelled at any time by this company by giving

62 to the insured a thirty (30) days’ written notice of cancellation except that when cancellation is

for nonpayment of premium, a ten (10) days’ written notice shall be required with

63 or without tender of the excess of the paid premium above the

pro

64 rata premium for the expired time.

65 Notice of cancellation shall state that

66 the excess premium (if not tendered) will be promptly

67 re-funded.

68 Mortgagee If loss hereunder is made payable, in whole

69 interests and or in part, to a designated mortgagee not

70 obligations. named herein as the insured, that interest in

71 this policy may be cancelled by giving to that

72 mortgagee a ten (10) days’ written notice of

73 cancellation.

74 If the insured fails to render proof of loss the mortgagee, upon

75 notice, shall render proof of loss in the form herein specified

76 within sixty (60) days thereafter and shall be subject to the pro-

77 visions hereof relating to appraisal and time of payment and of

78 bringing suit. If this company shall claim that no liability ex-

79 isted as to the mortgagor or owner, it shall, to the extent of the pay-

80 ment of loss to the mortgagee, be subrogated to all the mort-

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81 gagee's rights of recovery, but without impairing the mort-

gagee's

82 right to sue; or it may pay off the mortgage debt and require

83 an assignment thereof and of the mortgage. Other provisions

84 relating to the interests and obligations of the mortgagee may

85 be added hereto by agreement in writing.

86 Pro rata liability. This company shall not be liable for a

87 greater proportion of any loss than the

88 amount hereby insured shall bear to the whole insurance cover-

89 ing the property against the peril involved, whether collectible

or not.

90 Requirements in The insured shall give immediate written

91 case loss occurs. notice to this company of any loss, protect

92 the property from further damage, forth

with

93 separate the damaged and undamaged personal property, put

94 it in the best possible order, furnish a complete inventory of

95 the destroyed, damaged, and undamaged property, showing in

96 detail quantities, costs, actual cash value and amount of loss

97 claimed; and within sixty (60) days after the loss, unless such

98 time is extended in writing by this company, the insured shall

99 render to this company a proof of loss, signed and sworn to by

100 the insured, stating the knowledge and belief of the insured as to

101 the following: the time and origin of the loss, the interest of the

102 insured and of all others in the property, the actual cash value of

103 each item thereof and the amount of loss thereto, all encum-

104 brances thereon, all other contracts of insurance, whether valid

105 or not, covering any of the property, any changes in the title,

106 use, occupation, location, possession, or exposures of the prop-

107 erty since the issuing of this policy, and by whom and for what

108 purpose any building herein described and the several parts

109 thereof were occupied at the time of loss and whether or not it

110 then stood on leased ground, and shall furnish a copy of all the

111 descriptions and schedules in all policies and, if required, veri-

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112 fied plans and specifications of any building, fixtures, or

machin-

113 ery destroyed or damaged. The insured, as often as may be

114 reasonably required, shall exhibit to any person designated by

115 this company all that remains of any property herein described,

116 and submit to examinations under oath by any person named by

117 this company, and subscribe the same; and, as often as may be

118 reasonably required, shall produce for examination all books of

119 account, bills, invoices, and other vouchers, or certified copies

120 thereof if the originals are lost, at such reasonable time and

place as

121 may be designated by this company or its representative, and

122 shall permit extracts and copies thereof to be made.

123 Appraisal. In case the insured and this company shall

124 fail to agree as to the actual cash value or

125 the amount of loss, then, on the written demand of either, each

126 shall select a competent and disinterested appraiser and notify

127 the other of the appraiser selected within twenty (20) days of

128 that demand. The appraisers shall first select a competent and

129 disinterested umpire; and failing for fifteen (15) days to agree

130 upon the umpire, then, on request of the insured or this com-

131 pany, the umpire shall be selected by a judge of a court of

132 record in the state in which the property covered is located. The

133 appraisers shall then appraise the loss, stating separately actual

134 cash value and loss to each item; and, failing to agree, shall

135 submit their differences, only, to the umpire. An award in writ-

136 ing, so itemized, of any two (2) when filed with this company

shall

137 determine the amount of actual cash value and loss. Each

138 appraiser shall be paid by the party selecting him or her and

139 the expenses of appraisal and the umpire shall be paid by

140 the parties equally.

123 Appraisal. If the insured and this company fail to agree on the amount of loss, either

124 party may submit a written demand for appraisal. A denial of coverage does

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125 not relieve this company of its obligation to resolve disputes regarding the amount of loss

126 through appraisal.

127 Once appraisal is demanded, each party shall select an appraiser who is competent,

128 disinterested, and knowledgeable of the regulations promulgated under

129 § 27-9.1-8, or its successors, concerning the calculation of actual cash value, replacement

130 cost value, and consequential damage. Each party must notify the other of its selected

131 appraiser within twenty (20) days of the demand.

132 The appraisers shall have fifteen (15) days from their appointment to agree on a competent

133 and disinterested appraisal umpire; and failing, for any reason, for fifteen (15) days to

134 select an umpire, upon request of either the insured or this company, the umpire shall be

135 selected by a judge of a court of record in the state where the property covered is located.

136 The appraisers shall then appraise the loss, separately stating the actual cash value,

137 replacement cost value, and cause of the loss. If they fail to agree, only their differences

138 shall be submitted to the umpire. Actual cash value and replacement cost value shall be

139 determined in accordance with the regulations promulgated under

140 § 27-9.1-8, or its successors. The award shall include interest calculated from the date of

141 loss. A written award, so itemized, signed by any two (2) members of the appraisal panel,

142 filed with this company, shall determine the actual cash value and replacement cost value

143 of the loss. If this policy covers the appraised loss on a replacement cost basis, the

144 replacement cost value stated in the award shall be the amount due to the insured. This

145 company shall issue payment of the appraisal award within thirty (30) days of receiving

146 the award, unless the policy does not provide coverage for the cause of loss determined

147 by the award.

148 If this company disputes the validity of the appraisal award, it must, at the time of filing its

149 initial court action contesting the award or its initial defense against nonpayment of the

150 award, deposit the total amount of loss listed in the award into the court registry pending

151 resolution of the dispute.

152 Each appraiser shall be paid by the party selecting them, and the costs of the appraisal and

153 umpire shall be shared equally by the parties.

141154 Company's It shall be optional with this company to

142155 options. take all, or any part, of the property at the

143156 agreed or appraised value, and also to re-

144157 pair, rebuild, or replace the property destroyed or damaged with

145158 another of like kind and quality within a reasonable time, on

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146159 giving notice of its intention so to do within thirty (30) days

147160 after the receipt of the proof of the loss herein required.

148161 Abandonment. There can be no abandonment to this com-

149162 pany of any property.

150163 When loss The amount of loss for which this company

151164 payable may be liable shall be payable sixty (60) thirty (30)

152165 days after proof of loss, as herein provided,

153166 is received by this company and ascertainment of the loss is

154167 made either by agreement between the insured and this com-

155168 pany expressed in writing or by the filing with this company

156169 of an award as herein provided.

157170 Suit. No suit or action on this policy for the recov-

158171 ery of any claim shall be sustainable in any

159172 court of law or equity unless all the requirements of this policy

160173 shall have been complied with, and unless commenced within

161174 twenty-four (24) months next after inception of the loss.

162175 Subrogation. This company may require from the insured

163176 an assignment of all rights of recovery.

164177 against any party for loss to the extent that payment therefor

165178 is made by this company.

Standard Fire Insurance Policy of the State of

Expires

Property

Assured

No

(COMPANY)

It is important that the written portions of all policies covering

the same property read exactly alike. If they do not, they should

be made uniform at once.

     SECTION 3. Section 27-9.1-4 of the General Laws in Chapter 27-9.1 entitled "Unfair

Claims Settlement Practices Act" is hereby amended to read as follows:

     27-9.1-4. “Unfair claims practices” defined. [Effective January 1, 2025.]

     (a) Any of the following acts by an insurer, if committed in violation of § 27-9.1-3,

constitutes an unfair claims practice:

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     (1) Misrepresenting to claimants and insured relevant facts or policy provisions relating to

coverage at issue;

     (2) Failing to acknowledge and act with reasonable promptness upon pertinent

communications with respect to claims arising under its policies;

     (3) Failing to adopt and implement reasonable standards for the prompt investigation and

settlement of claims arising under its policies;

     (4) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of

claims submitted in which liability has become reasonably clear;

     (5) Compelling insured, beneficiaries, or claimants to institute suits to recover amounts due

under its policies by offering substantially less than the amounts ultimately recovered in suits

brought by them;

     (6) Refusing to pay claims without conducting a reasonable investigation;

     (7) Failing to affirm or deny coverage of claims within a reasonable time after having

completed its investigation related to the claim or claims;

     (8) Attempting to settle or settling claims for less than the amount that a reasonable person

would believe the insured or beneficiary was entitled by reference to written or printed advertising

material accompanying or made part of an application;

     (9) Attempting to settle or settling claims on the basis of an application that was materially

altered without notice to, or knowledge or consent of, the insured;

     (10) Making claims payments to an insured or beneficiary without indicating the coverage

under which each payment is being made;

     (11) Unreasonably delaying the investigation or payment of claims by requiring both a

formal proof of loss form and subsequent verification that would result in duplication of

information and verification appearing in the formal proof of loss form;

     (12) Failing in the case of claims denials or offers of compromise settlement to promptly

provide a reasonable and accurate explanation of the basis of those actions;

     (13) Failing to provide forms necessary to present claims within ten (10) calendar days of

a request with reasonable explanations regarding their use;

     (14) Failing to adopt and implement reasonable standards to assure that the repairs of a

repairer owned by or required to be used by the insurer are performed in a workmanlike manner;

     (15) Misleading a claimant as to the applicable statute of limitations;

     (16) Failing to respond to a claim within thirty (30) days, unless the insured shall agree to

a longer period;

     (17) Engaging in any act or practice of intimidation, coercion, threat, or misrepresentation

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of consumers rights, for or against any insured person, claimant, or entity to use a particular rental

car company for motor vehicle replacement services or products; provided, however, nothing shall

prohibit any insurance company, agent, or adjuster from providing to such insured person, claimant,

or entity the names of a rental car company with which arrangements have been made with respect

to motor vehicle replacement services; provided, that the rental car company is licensed pursuant

to § 31-5-33;

     (18) Refusing to honor a “direction to pay” executed by:

     (i) An insured, claimant, indicating that the insured or claimant wishes to have the

insurance company directly pay the insured’s or claimant’s motor vehicle replacement vehicle

rental benefit to the rental car company of the consumer’s choice; provided, that the rental car

company is licensed pursuant to § 31-5-33. Nothing in this section shall be construed to prevent

the insurance company’s ability to question or challenge the amount charged, in accordance with

its policy provisions, and the requirements of the department of business regulation; provided that,

the insurance company promptly notifies the rental car company in writing of the reason. The

written notification shall be made at or before the time that the insurance company submits payment

to the rental car company;

     (ii) An insured or claimant, indicating that the insured or claimant wishes to have the

insurance company directly pay the insured’s or claimant’s motor vehicle repair benefit, as a single

party payment exclusively to the auto body shop of the consumer’s choice; provided that, the auto

body shop is licensed pursuant to § 5-38-4;

     (19) Refusing to honor a “direction to pay” executed by an insured, claimant, indicating

that the insured or claimant wishes to have the insurance company directly pay the insured’s

property damage benefit to the restoration company of the consumer’s choice; provided, however,

that the amount of the claim to be paid directly to the restoration company shall be no greater than

five thousand dollars ($5,000), and that the restoration company is licensed pursuant to § 5-65-3.

Nothing in this section shall be construed to:

     (i) Prevent the insurance company’s ability to question or challenge whether the services

billed for are covered by the policy, related to an occurrence covered by the policy, or the amount

charged, in accordance with its policy provisions, and the requirements of the department of

business regulation; or

     (ii) Adversely affect the right of any mortgagee or other person with an interest in the policy

unless such mortgagee or other person has also executed the “direction to pay”;

     (20) Modifying any published manual, i.e., Motor’s Auto Repair Manual, Mitchells, or any

automated appraisal system, relating to auto body repair without prior agreement between the

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parties;

     (21) Failing to use a manual or system in its entirety in the appraisal of a motor vehicle;

     (22) Refusing to compensate an auto body shop for its documented charges as identified,

and based on, the most current version of automotive industry-recognized software programs or

systems for paint, body, and refinishing materials, utilized in auto body repair, including, but not

limited to, programs such as Mitchell's RMC, PMC Logic, Paint, Micromix, or other paint

manufacturer's programs. An insurer shall not discount documented charges by failing to use a

system in its entirety, including an automotive industry standard markup;

     (23) Refusing to acknowledge and compensate an auto body repairer for documented

procedures identified as required or recommended by the original equipment manufacturer, or paint

manufacturer, upon the initial request from the auto body shop, such as, but not limited to, post

collision procedures and components that should not be reused or reinstalled, when included in the

repairer’s appraisal, or when requested by the repairer (i.e., components that cannot be

reused/reinstalled: requiring clips, retainers, hardware, and materials);

     (24) Failing to comply with the requirements of § 31-47-12.1;

     (25) Failure to have an appraisal performed by a licensed appraiser where the motor vehicle

has sustained damage estimated to exceed two thousand five hundred dollars ($2,500). The licensed

appraiser referred to herein must be unaffiliated with the repair facility repairing the subject motor

vehicle; must perform a physical inspection of the damaged motor vehicle; and may not perform

an appraisal based upon pictures of the damaged motor vehicle;

     (26) Failure of an insurer’s assigned appraiser, or representative, to promptly schedule an

appointment for an appraisal of a damaged vehicle with the auto body repair shop, at an agreed

upon date and time, between normal business hours;

     (27) Failure to perform an initial appraisal within three (3) business days after a request is

received from an auto body repair shop, provided the damaged motor vehicle is on the premises of

the repair shop when the request is made, and failure to perform a supplemental appraisal inspection

of a vehicle within four (4) business days after a request is received from an auto body repair shop.

If the insurer’s appraiser fails to inspect the damaged motor vehicle within the allotted number of

business days for an initial appraisal or a supplemental appraisal, the insurer shall forfeit its right

to inspect the damaged vehicle prior to repairs, and negotiations shall be limited to labor and the

price of parts and shall not, unless objective evidence to the contrary is provided by the insurer,

involve disputes as to the existence of damage or the chosen manner of repair. The time limitations

set forth in this subsection may be extended by mutual agreement between the auto body repair

shop and the insurer;

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     (28) Refusing to extend the rental vehicle coverage requirements of an insured or claimant

proportionally to claim delays caused by the insurer;

     (29) Designating a motor vehicle a total loss if the cost to rebuild or reconstruct the motor

vehicle to its pre-accident condition is less than seventy-five percent (75%) of the “fair market

value” of the motor vehicle immediately preceding the time it was damaged:

     (i) For the purposes of this subdivision, “fair market value” means the retail value of a

motor vehicle as set forth in a current edition of a nationally recognized compilation of retail values

commonly used by the automotive industry to establish values of motor vehicles;

     (ii) Nothing herein shall be construed to require a vehicle be deemed a total loss if the total

cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is greater than seventy-

five percent (75%) of the fair market value of the motor vehicle immediately preceding the time it

was damaged;

     (iii) Nothing herein shall prohibit an insurance company from agreeing to deem a vehicle

a total loss at the vehicle owner’s request and with the vehicle owner’s express written authorization

if the cost to rebuild or reconstruct the motor vehicle to its pre-accident condition is less than

seventy-five percent (75%) of the “fair market value” of the motor vehicle immediately preceding

the time it was damaged;

     (iv) If condition adjustments are made to the retail value of a motor vehicle designated a

total loss, all such adjustments must be in accordance with the standards set forth in the current

edition of a nationally recognized compilation of retail values, commonly used by the automotive

industry, used by the insurer to determine the retail value of the vehicle; and all such adjustments,

including prior damage deductions, must be itemized, fair, and reasonable; and

     (v) When a vehicle is deemed a total loss, if the insurer is not retaining the salvage, the

insurer must notify the owner of the vehicle in writing of the requirements of obtaining both a

salvage title and a reconstructed title from the department of motor vehicles pursuant to chapter 1

of title 31, and must obtain, in writing, the owner’s consent and acknowledgement that the insurer

is not retaining the salvage and include a statement of the owner’s obligation and potential costs to

dispose of or otherwise retain the salvage;

     (30) Negotiating, or effecting the settlement of, a claim for loss or damage covered by an

insurance contract with an unlicensed public adjuster acting on behalf of an insured. Nothing

contained in this section shall be construed to preclude an insurer from dealing with any individual

or entity that is not required to be licensed under chapter 10 of title 27;

     (31) Refusing to pay an auto body repair shop for documented necessary sublet services

paid out to vendors or incurred by the auto body repair shop, for specialty or unique services

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performed in the overall repair process, including costs and labor incurred to research, coordinate,

administrate, or facilitate the necessary sublet service, and an automotive industry standard markup.

Examples of sublet services include, but are not limited to, towing, transportation, suspension,

alignments, electronic calibrations, diagnostic work, mechanical work, and paid charges to release

a vehicle;

     (32) Failure of any domestic, foreign, or alien insurers to comply with the requirements of

this section; when settling claims on Rhode Island registered vehicles repaired in Rhode Island,

regardless of the state where the insurance policy was issued or originates;

     (33)(i) When a claim is settled, or partially settled, where the named insured is represented

by a public adjuster licensed pursuant to § 27-10-5, failing to obey a direction to pay letter directing

the insurer to issue a check or checks payable to the public adjuster for the public adjuster’s fee,

but not more than ten percent (10%) of the total amount of the settlement, and a separate check

payable to the named insured or any loss payee or mortgagee, or both, whichever is appropriate,

for the balance; provided that, the direction to pay letter is signed or electronically signed and dated

or electronically dated by the named insured and contains the following information:

     (A) Name of insured(s);

     (B) The claim number (if obtained);

     (C) The date or approximate date of the loss;

     (D) The public adjuster’s name;

     (E) The name of the insurer;

     (F) The public adjuster’s fee; and

     (G) The addresses to which each check shall be sent.

     (ii) Nothing in this subsection shall be construed to:

     (A) Prevent the insurance company’s ability to question or challenge whether the services

billed for are covered by the policy, related to an occurrence covered by the policy, or the amount

charged, in accordance with its policy provisions, and the requirements of the department of

business regulation; or

     (B) Adversely affect the right of any mortgagee or other person with an interest in the

policy unless such mortgagee or other person has also executed the “direction to pay”.;

     (34) Depreciating the cost of labor when calculating and paying actual cash value or

replacement cost value, as defined in the regulations promulgated under § 27-9.1-8 or its

successors;

     (35) Failing to account for consequential damage or applicable safety laws when

calculating and paying actual cash value or replacement cost value, as defined in the regulations

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promulgated under § 27-9.1-8 or its successors;

     (36) Failing to notify the claimant of their right to invoke the policy’s appraisal provision

once it becomes reasonably clear that the claimant and the insurer disagree on the claim’s amount

of loss.

     (b)(1) Nothing contained in subsections (a)(20), (a)(21), and (a)(22) of this section shall be

construed to interfere with an auto body repair facility’s contract with an insurance company.

     (2) If an insurance company and auto body repair facility have contracted under a direct

repair program or any similar program thereto, the provisions of subsections (a)(20), (a)(21), and

(a)(22) of this section shall not apply.

     (3) If the insured or claimant elects to have the vehicle repaired at a shop of the insured’s

or claimant’s choice, the insurer shall not limit or discount the reasonable repair costs based upon

the charges that would have been incurred had the vehicle been repaired by the insurer’s chosen

shop(s).

     SECTION 4. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY --

CAUSES OF ACTION

***

     This act would provide greater clarity in insurance claim settlements, with regard to the

appraisal process in fire insurance loss claims and procedural safeguards to enhance consumer

protections against unfair claims practices by insurers.

     This act would take effect upon passage.

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