OGC Opinion No. 07-10-03

The Office of General Counsel issued the following opinion on October 10, 2007, representing the position of the New York State Insurance Department.

RE: Settlement Checks

Question Presented:

What is the time frame for an insurer to forward payment to a claimant after a settlement on a liability insurance claim?


The failure of an insurer to forward a settlement check in a timely manner may be construed as an unfair claims settlement practice pursuant to Insurance Law § 2601 (McKinney 2006) and § 216.6 of NYCRR, Tit. 11, Pt. 216 (Regulation 64). That regulation requires an insurer to pay any settlement amount not later than five business days after receipt of the settlement agreement, or from the date of the performance of the claimant of any condition set by such agreement.


It is reported that the claimant sustained personal injuries in a motor vehicle accident. Subsequently, a settlement was reached with the insurer on the claim. A release was forwarded to the insurer but, more than sixty-five days later, the claimant has yet to receive any check from the insurer.


Insurance Law § 2601 is relevant to the inquiry. That statute prohibits an insurer from engaging in unfair claims settlement practices and is relevant to your inquiry. 11 NYCRR § 216.6 sets forth standards for prompt, fair and equitable settlement of claims1, including liability claims, as follows:

(a) In any case where there is no dispute as to coverage, it shall be the duty of every insurer to offer claimants, or their authorized representatives, amounts which are fair and reasonable as shown by its investigation of the claim, providing the amounts so offered are within policy limits and in accordance with the policy provisions.

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(f) Every insurer shall pay any amount finally agreed upon in settlement of all or part of any claim not later than five business days from the receipt of such agreement by the insurer, or from the date of the performance by the claimant of any condition set by such agreement, whichever is later, except as provided in section 331 of the Insurance Law as respects liens by tax districts on fire insurance proceeds.

It is unclear, based on the fact pattern presented, when the actual settlement agreement was received by the insurer. It also is unclear if the release was a condition of the settlement agreement. The five business days for the insurer to provide payment is triggered by the receipt of the agreement by the insurer or the date of performance by the claimant of any condition set by the agreement. See Office of General Counsel Opinion No. 03-02-01 (February 3, 2003).

For further information you may contact Associate Counsel Alexander Tisch at the New York City Office.

1 11 NYCRR § 216.7 sets forth requirements with respect to motor vehicle physical damage claims.