Guidance regarding Rioting and Civil Commotion Emergency Regulation

What is the Department doing to help businesses and consumers affected by rioting or civil commotion?
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On June 4, 2020, the New York State Department of Financial Services promulgated an Emergency Regulation requiring New York-regulated insurers to accelerate the resolution and payment of insurance claims submitted on or after May 30, 2020 by individuals and businesses who suffered damage as a result of a riot or civil commotion in New York State.  Insurers must, among other things:

  • Promptly process and investigate insurance claims made by claimants;
  • Allow claimants to make immediate repairs to certain damaged property if necessary to protect health or safety, and to submit claims with reasonable proof of loss such as photographs or video recordings; and
  • Offer small businesses and individuals the option to resolve disputes through an impartial mediation process paid for by the applicable insurer.
 
To what claims does the Emergency Regulation apply?
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The Emergency Regulation applies to any claim filed on or after May 30, 2020 for loss of or damage to real property, loss of or damage to personal property, or other liabilities arising out of such loss or damage to property or injury to persons resulting from a riot or civil commotion in New York State where the Superintendent of Financial Services (“Superintendent”) has determined that it is in the best interests of the people of the State for the Emergency Regulation to apply.

The Superintendent has determined that it is in the best interests of the people of this State for the Emergency Regulation to apply.  This determination applies to the entirety of New York State, and will remain in effect until the expiration of the Emergency Regulation on September 2, 2020 or the Superintendent determines otherwise, whichever is earlier.

 
Is property damage caused by rioting or civil commotion covered by standard insurance policies?
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Property damage caused by rioting or civil commotion is generally covered under standard motor vehicle, business, and homeowners’ insurance policies. 

  • Damage to the structure of a home, as well as any personal possessions, is typically covered under a standard homeowners’ insurance policy.  If the damage is extensive enough that the insured cannot live in his or her home, the policy may cover the cost of additional living expenses while the home is being repaired. 
  • Damage to motor vehicles and their contents may be covered under the optional comprehensive portion of a motor vehicle insurance policy.  Drivers who chose to purchase this optional coverage are reimbursed if a windshield or window is cracked or shattered, although they may be required to pay a deductible. 
  • Damage to a commercial building and its contents is generally covered under a standard business owners’ policy.  Some insurers may require insureds to purchase an optional endorsement or rider to provide coverage for plate glass windows.  Businesses that are forced to suspend operations or limit hours due to rioting or civil commotion may have coverage for the loss of income under business interruption coverage. However, this is typically only triggered if there is direct physical damage to the premises. Read some additional information on business interruption insurance.

Because coverage varies across policies, an insured must read the relevant policy and consult its insurance producer or insurer for more information.

 
May an insured make necessary repairs to property that was damaged as a result of rioting or civil commotion?
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Where necessary to protect health or safety, the Emergency Regulation permits insureds to make immediate repairs to the exterior windows, exterior doors, and, for minor permanent repairs, exterior walls of real property.

What proof of loss does a claimant need to submit to an insurer in connection with a property damage claim?
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The Department recognizes that affected New York claimants may be limited in their ability to document claims due to the burdens of the COVID-19 pandemic and any continuing unrest.  As a result, the Emergency Regulation requires insurers to accept reasonable proof of loss documentation of the damaged or destroyed property (without the need for a physical inspection), including photographs or video recordings, material samples (if applicable), inventories, and receipts for any repairs to or replacement of property.  Many insurers offer access to digital applications that can take 3D photographs or process claims virtually.  Because technology offerings vary across insurers, a policyholder should review the policy and consult the policyholder’s insurance producer or insurer for more information.

When is an insurer required to respond to a claim?
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For any claim filed on or after May 30, 2020 for loss of or damage to property, or liabilities arising out of such loss or damage to property or injury to persons, resulting from a riot or civil commotion in New York State, the insurer must commence an investigation of the claim and furnish a written notice to the claimant detailing all items, statements, and forms (if any) that the insurer reasonably believes will be required of the claimant, within six (6) business days of receiving notice of the claim or June 5, 2020, whichever is later.

Within fifteen (15) business days of receipt by the insurer of a properly executed proof of loss and receipt of all items, statements, and forms that the insurer requested from the claimant, the insurer must notify the claimant in writing of the acceptance or rejection of the claim.  If the insurer needs more time to determine whether the claim should be accepted or rejected, it must notify the claimant in writing within fifteen (15) business days of receipt of the proof of loss or requested information or June 5, 2020, whichever is later.  The notice must include the reasons additional time is needed for investigation and the anticipated date a determination on the claim will be provided.  Where the insurer requires a physical inspection, the notice must also include the reason for that inspection.

If the claim remains unsettled, unless the matter is in litigation or arbitration, the insurer must send to the claimant, within thirty (30) days of the initial letter setting forth the need for further time to investigate and every thirty (30) days thereafter, a letter setting forth the reasons additional time is needed for investigation and the anticipated date a determination on the claim will be provided.  If the claim is accepted, the insurer must advise the claimant in writing of the amount offered.  If the claim is rejected, the insurer must notify the claimant in writing of any applicable policy provision limiting the claimant’s right to sue the insurer.

What happens if an insurer has not advised a claimant in writing of the insurer’s acceptance or rejection of a claim within fifteen (15) business days of receiving a properly executed proof of loss and all items, statements, and forms that the insurer requested from the claimant?
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An insurer that has not advised a claimant in writing of the insurer’s acceptance or rejection of a claim within fifteen (15) business days of receiving a properly executed proof of loss and all items, statements, and forms that the insurer requested from the claimant must submit a report to the Superintendent at [email protected] on the Tuesday of each week that the insurer has any such claims (or the next business day if that Tuesday is a holiday) that specifies for each such claim:

  1. the alleged date the loss occurred;
  2. the date the claim was filed with the insurer;
  3. the date a properly executed proof of loss and receipt of all items, statements and forms required by the insurer were received by the insurer;
  4. the alleged estimated amount of the loss;
  5. the reason given for the extension;
  6. the anticipated date a determination will be made on the claim provided to the claimant;
  7. how many extensions have been requested on that claim; and
  8. the zip code where the loss occurred.

The report should be submitted in the form of a spreadsheet (Excel template).

 
Does a claimant have any recourse if a claim is denied, the value of a claim is significantly disputed, or the disposition of a claim is significantly delayed?
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Yes.  In such an event, a claimant may have the right to request mediation paid for by the applicable insurer.  Specifically, an insurer must send notice to the claimant or the claimant’s authorized representative informing the claimant of the claimant’s right to request mediation:

  • at the time the insurer denies a claim in whole or in part;
  • within ten (10) business days of the date that the insurer receives notification from the claimant that the claimant disputes a settlement offer made by the insurer, provided that the difference between the positions of the insurer and claimant is $1,000 or more; or
  • within two (2) business days after the date that is forty-five (45) days after the insurer has received a properly executed proof of loss and all items, statements and forms that the insurer had requested from the claimant, provided that the insurer has not offered to settle the claim prior to such date.
What must be contained in the notice of the right to request mediation?
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The notice must inform the claimant of the claimant’s right to request mediation and must provide instructions on how the claimant may make such a request, including the address, phone number, and fax number of the American Arbitration Association (“AAA”), which is the organization designated by the Superintendent to provide a mediator to mediate civil commotion claims.  The notice must also provide the insurer’s address and phone number for requesting additional information.

How can a claimant request mediation?
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To request mediation, a claimant must complete a mediation request form (Mediation Request Form) and send it either to the AAA or to the insurer for transmittal to the AAA. The Mediation Request Form (PDF) is available on the AAA website or by calling the toll-free numbers listed below, or by sending an email to [email protected].

Mediation Request Forms can be filed directly online via the AAA webfile system at www.adr.org, emailed or faxed to the numbers listed below, or mailed to the insurer for transmission to the AAA. In such cases, the insurer must forward the request to the AAA within three (3) business days of receiving the Mediation Request Form.

AAA contact information is as follows:

Phone: (855) 366-9767 or (855) 366-9768 or (917) 438-1660

Email: [email protected]

Fax: (646) 845-1958

Webfilewww.adr.org

 
Must the AAA schedule a mediation for every request form received?
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In general, yes, except that a mediation shall not address, and the insurer shall not be required to attend a mediation for:

  • a dispute in property valuation that has been submitted to an appraisal process or a claim that is the subject of a civil action filed by the claimant against the insurer, unless the insurer and the claimant agree otherwise; or
  • any claim that the insurer has reason to believe is a “fraudulent insurance act,” as that term is defined in Insurance Law § 403(a), or for which the insurer has knowledge that a fraudulent insurance act has taken place.
If a claimant requests mediation, will that harm the claimant’s chances of pursuing other remedies against the insurer?
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A claimant’s right to request mediation will not affect any other right the claimant may have to redress the dispute, including remedies specified in the insurance policy, such as a claimant’s right to request an appraisal, the right to litigate the dispute in the courts if no agreement is reached, or any right provided by law.  However, the pendency of a mediation will not automatically toll any time limits applicable to other remedies, such as statutes of limitation.  Thus, claimants should be mindful of deadlines applicable to any other remedies they may wish to pursue.

What rules govern the mediation?
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The mediation will be governed by procedures that have been established by the AAA and approved by the Superintendent. By submitting a Mediation Request Form, a claimant accepts the applicability of the procedures, which also apply to the insurer by virtue of the Emergency Regulation. The procedures are available on the AAA website.

 
Who will cover the cost of the mediation?
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In general, the insurer must pay for the cost of mediation.  Payment is due within five (5) days of the insurer’s  receipt of a bill from the AAA.  The exceptions to this rule are as follows:

  • A mediation session may be cancelled or rescheduled if the mediator determines that either the claimant or the insurer is not participating in good faith.  If the claimant wishes to have another session, the party that the mediator determined was not participating in good faith will be responsible for the cost of a rescheduled mediation session, which shall be no more than $400 per additional session.  Thus, a claimant determined not to have participated in good faith in a mediation who nonetheless wishes to have another session will have to cover the cost of the rescheduled mediation session.
  • If a mediation session is cancelled less than three (3) business days in advance of the scheduled mediation session, a cancellation fee must be paid by the insurer if the cancellation is caused by the insurer or if the cancellation is caused by a claimant showing good cause.  If the cancellation is caused by a claimant, without good cause shown, then the cancellation fee must be paid by the claimant.
Must a claimant participate in mediation if the claimant does not wish to do so?
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No. Mediation is voluntary for the claimant.

Is the claimant or the insurer bound to a settlement proposal made in mediation?
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No.  The insurer and the claimant do not have to agree to any settlement proposal; the mediation is a nonbinding process.

If the claimant and the insurer agree to a settlement during the mediation, how is the settlement documented?
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A settlement agreement reached in a mediation must be transcribed into a written agreement that is signed by a representative of the insurer with the authority to do so and by the claimant.  Any such settlement must include a provision affording the claimant a right to rescind the agreement within three (3) business days from the date of the settlement, provided that the claimant has not cashed or deposited any check or draft disbursed to the claimant for the disputed matter as a result of the agreement reached in the mediation.