Requires a liability insurer that has an opportunity to settle a claim at or within the policy limits, and refuses to do so, to be liable for any verdict in excess of the insurance policy limits

2025 Regular Session Introduced by Harry Bronson and 2 co-sponsors

The bill makes liability insurers pay any verdict exceeding policy limits if they could have settled within those limits but declined.

REFERRED TO INSURANCE

Overview

Bill A 3889 would hold a liability insurer financially responsible for any verdict that exceeds the policy limits when the insurer had an opportunity to settle the claim within those limits but refused to do so. The measure targets insurers’ settlement decisions in liability claims and seeks to deter unreasonable refusals to settle for policy-adequate amounts.

Purpose and Intent

Encourage sensible settlement practices by liability insurers when a claim could be resolved within policy limits.

Shift potential financial exposure for excess verdicts from insured individuals to the insurers that declined an available settlement.

Reduce the chance that plaintiffs obtain verdicts greater than the insured’s coverage solely due to a refusal to settle within limits.

Key Provisions (as described)

If a liability insurer has an opportunity to settle a claim at or within the policy limits and refuses to settle, the insurer would be liable for any verdict in excess of the policy limits.

The language implies a direct financial responsibility on the insurer for excess verdict amounts that arise because of a failure to settle within policy limits; the bill does not specify exemptions, caps, or procedures in the available summary.

The exact definition of “opportunity to settle” and any procedural requirements (notice, timeframes, defenses) are not detailed in the provided information.

Who Is Affected

Primary: Liability insurers, especially those handling claims with the potential to be settled within policy limits.

Secondary: Policyholders/insured individuals who would otherwise be responsible for excess verdicts if the settlement did not occur; plaintiffs who may benefit from access to excess verdicts against insurers.

Lawyers and defendants in liability cases, who may see changed settlement dynamics.

Procedural and Timeline Details

Introduced: January 30, 2025.

Status: Referred to the Assembly Committee on Insurance.

Legislative actions recorded: Two entries on 2025-01-30 both noting “REFERRED TO INSURANCE.”

Sponsors: Demond Meeks (primary), Jessica Gonzalez-Rojas (cosponsor), Harry B. Bronson (cosponsor).

Related bills from prior sessions: A 7523 and A 2095, indicating ongoing interest in insurer liability for excess verdicts.

Related Considerations

Potential impact on insurance premiums and cost of claims handling ( insurers may adjust pricing or settlement practices).

Possible considerations of fairness and due process, especially regarding defining “opportunity to settle” and any applicable protections for insured individuals.

The bill’s relationship to existing “excess verdict” or bad-faith settlement concepts in New York law may warrant close examination.

Summary

A 3889 proposes a substantive shift in liability for excess verdicts by attributing responsibility to liability insurers that had a viable settlement option within policy limits but chose not to settle. Introduced in early 2025 and referred to the Insurance committee, the bill reflects a legislative intent to deter settlements practices that unnecessarily expose plaintiffs to verdicts above policy limits.

Bill