Cheh’s Bill to Hold Insurance Companies Accountable for Unfair and Unpaid Claims

FOR IMMEDIATE RELEASE

February 5, 2019

Communications Director: Kelly Whittier

Cheh’s Bill to Hold Insurance Companies Accountable for Unfair and Unpaid Claims

WASHINGTON, D.C. –Today, February 5^th, Councilmember Mary M. Cheh (D-Ward 3) re-introduced the “Insurance Claims Consumer Protection Amendment Act of 2019.”

Currently, an insurance customer in the District of Columbia whose claim has been unfairly denied may only bring an insurance company to court if the company commits a “bad faith” offense with enough regularity as to make it a general business practice. In the rare instance where a claimant takes the insurer to court for breach of contract, attorney’s fees and costs diminish the judgment should the claimant win. 

“There is an inherent power imbalance between insurance companies and the people they insure, and District residents are especially vulnerable when an insurance company denies a valid claim. There are too few protections in place for customers and little recourse against an insurer unless the company is shown to commit a “bad faith” offense –making it virtually impossible for a customer to fight back against an insurance company’s intentionally low-ball offer or outright denial of a claim,” said Councilmember Cheh.

The legislation will allow an insurance claimant to bring an action in DC Superior Court when an insurer commits an unfair claim settlement act, or refuses to pay a claim within 30 days of receipt of sufficient documentation of the claimant’s loss, where such refusal to pay is wrong, mistaken, in error, or unreasonable, regardless of the insurer’s intent. If the jury or judge finds in the claimant’s favor, the court is directed to award interest on the amount claimed, attorneys’ fees and costs, expert witness fees and costs, and court costs. The court will also award an additional penalty of at least the unpaid claim amount and up to 3 times the unpaid claim amount. To ensure fairness in the process, insurers will have a 30-days opportunity to pay the claimant before the claimant may file suit.

“This bill creates a process for customers to take action against an insurance company that has maliciously, erroneously, or unreasonably denied a valid claim. Thirty states provide these types of protections for customers who have been denied valid claims by their insurance companies, and it is time that the District does the same.”

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