Earlier this year, I wrote about how many homeowners still waiting for insurance payouts after Superstorm Sandy will soon run out of time to take their cases to court if that is necessary. In Connecticut, it is industry practice to include in homeowners' insurance policies a time limitation on lawsuits. The law lets insurers limit lawsuits by property owners to 18 months after a disaster hits.
Now the Connecticut General Assembly has taken up a bill that would extend the time period to sue to two years after a disaster hits. Another bill would allow property owners to recoup attorney fees and court costs after a disaster.
An excerpt on my piece about the legislation for the Connecticut Law Tribune:
Lawmakers are considering several pieces of legislation that would change state laws governing homeowners' insurance policies, including a bill that would award reasonable attorney fees and lawsuit costs to plaintiffs who win their cases against insurers.
The legislation is supported by trial attorneys, but opposed by the insurance industry.
State Rep. Robert W. Megna, D-New Haven, and co-chair of the Insurance and Real Estate Committee, said there's merit in authorizing plaintiffs who win their cases to be able to obtain attorney fees and lawsuits costs.
When policyholders report damage claims to their insurers and when those claims have been denied to some extent, the policyholders have the burden of hiring an attorney and paying for that attorney out of any recovery they obtain, Megna said. The proposed legislation would remove that burden.
As it stands, attorney fees are "going to come off the property damage settlement," Megna said. "Even if the homeowner prevails, they're at a disadvantage when it comes to fixing their home."
The committee will decide this week whether the bills, including the attorney fees measure, will be voted out of committee, Megna said.
Ryan Suerth, a Hartford-based solo practitioner who represents policyholders in insurance disputes, testified in support of the legislation. "The intent of it is to ensure that the policyholder gets the benefit of the policy they purchased… You get taken care of 100 percent," Suerth said in an interview.
If the legislation is passed, there may be a decrease in litigation alleging bad faith by insurers or alleging that insurers violated the Connecticut Unfair Trade Practices Act and the Connecticut Unfair Insurance Practices Act, Suerth said. Attorney fees can be obtained in those types of lawsuits but not in breach of contract actions prosecuted against insurers.
The Insurance Association of Connecticut said in submitted testimony that, at times, it can be unclear when policyholders "prevail" in legal action against an insurer, and thus it would be confusing just who is entitled to attorney fees and costs.
"The proposal is contrary to the traditions of the American judicial system," the association said in its prepared testimony. "Insurers should be able to challenge questionable claims when there is a good-faith basis for such a challenge … Examining the validity of claims helps insurers maintain rates for all policyholders by weeding out the frivolous or meritless claims."
If the policy behind the legislation is to deter insurers from unnecessarily denying or delaying claims, the threat of bad-faith claims or penalties from the Insurance Department already does that, the association said.
Lawyer and Legal Journalist
