If enacted, HB 665 will significantly impact the insurance sector, particularly in how liability limits are structured in policies. By preventing the reduction of liability limits by defense costs, this bill could lead to increased transparency for policyholders. It would safeguard consumers from scenarios where their coverage is unintentionally depleted due to legal defense costs, fostering greater confidence in liability insurance contracts. Additionally, the insurance commissioner retains the authority to grant waivers for certain other insurance types, which allows for some flexibility within the regulatory framework.
Summary
House Bill 665, introduced by Representative Seabaugh, is designed to prohibit insurers from issuing liability policies that reduce the policy's limits due to defense costs associated with claims. Specifically, the bill states that only certain types of insurance can qualify for exceptions to this prohibition, with personal lines and medical malpractice policies being exempt from any waivers. The bill aims to ensure that policyholders retain the full extent of their liability coverage, regardless of the costs incurred while defending against claims.
Sentiment
The reception of HB 665 has been predominantly positive among consumer advocacy groups and certain legislative members who believe it protects the rights of insured individuals. There is general agreement that the bill addresses an important gap in liability coverage where policyholders might not fully understand how much of their coverage could be eroded through defense costs. Critics, however, may argue that the additional regulations could lead to higher premiums as insurers adjust to the new requirements, which poses a potential concern for the industry.
Contention
One notable area of contention revolves around the exemptions that allow the commissioner of insurance to waive the prohibition for specific types of coverage. While this provision is seen as necessary for maintaining market flexibility, it could create confusion regarding the extent of coverage for policyholders in various scenarios. Furthermore, the requirement for clarity in insurance contracts about the inclusion of defense costs in the limit of liability could lead to broader discussions about transparency and consumer protection in insurance practices.
Resolution Granting The Claims Commissioner An Extension Of Time To Dispose Of Certain Claims Against The State Pursuant To Chapter 53 Of The General Statutes.
Resolution Granting The Claims Commissioner An Extension Of Time To Dispose Of Certain Claims Against The State Pursuant To Chapter 53 Of The General Statutes.