Well it’s that time of the year again. Maryland’s 2019 legislative session has officially come to an end and we can now begin the process of figuring out just how much our world is going to change. For those in the insurance field, the answer to this question lies beneath a parcel of newly passed bills. We have focused on five impactful bills that passed this year and will shortly go into effect.
Discovery of Insurance Coverage: SB 101 (Chapter 748)
Effective Date: October 1, 2019
With the passage of this legislation, the pre-trial litigation discovery requirements applicable to motor-vehicle tort claims have been extended to other tort claims involving bodily injury and death. Where insurance coverage may be provided under motor vehicle insurance policy, or a homeowner’s or renter’s policy, an insurer will have to provide information to the claimant.
In order to obtain the “applicable limits”, a claimant must submit to the insurer:
- The date of the alleged tort.
- The name and last known addresses of the alleged tortfeasor.
- A copy of the vehicle accident report, the police report, or any other official report concerning the tort, if available.
- The insurer’s claim number, if available.
- A letter from an attorney admitted to practice law in the State “certifying” that: (1) the attorney has made reasonable efforts to investigate the underlying facts of the claim; and (2) based on the attorney’s investigation, the attorney reasonably believes that the claim is not frivolous.
After this information is submitted, an insurer will need to determine if it “may be liable” to (1) satisfy all or part of the claim; or (2) indemnify or reimburse for payments made to satisfy the claim. If so, then the insurer must provide the claimant certain information within 30 days.
By October 1, 2019, an insurer needs to have procedures in place which will allow for proper responses to inquiries related to limits. It is important to note that this new legislation does not apply to all types of policies; insurers issuing commercial policies and umbrella policies do not have to provide information regarding limits. Insurers also need to have check-lists created to make sure that the required information is provided by the claimant before the limits information is supplied.
It is not entirely clear what implications this new legislation will have from a regulatory or administrative standpoint. However, it is suspected that repeated compliance failures could be considered as part of an Unfair Claim Settlement Practices Act investigation. It is also possible that the failure to provide the required information might also, in the appropriate case, raise extra contractual issues or concerns.
Driver’s Licenses: Identification of Gender: SB 196 / HB 421 (Chapters 648-649)
Effective Date: October 1, 2019
With this new legislation, applicants for driver’s licenses may identify as male, female, or unspecified/other. While this bill does not directly impact insurers, insurers that base rates on gender may have to consider how to deal with the designation of unspecified/other for rating purposes.
Rental Vehicles: SB 436 / HB 1003 (Chapters 471-472)
Effective Date: January 1, 2020
Generally, an owner of a motor vehicle registered in the state must maintain insurance providing for the minimum security required by law for the vehicle; in most instances, this insurance is primary. Until this law, this generally was the case even when the vehicle at issue was a rental vehicle. Now, the insurance of the owner of the vehicle can, under some circumstances, be secondary – with the renter’s insurance being primary.
Homeowner Insurance – Marital Status: SB 607 (Chapter 331)
Effective Date: January 1, 2020
In Maryland, there is no general prohibition stopping insurers from using marital status in the underwriting of homeowner’s insurance. As a result of the use of marital status in underwriting, there were occasions where a widow or widower was paying higher premiums for homeowner’s insurance after the death of a spouse. This law prohibits an insurer from increasing the homeowner’s insurance premium of an insured who has become a surviving spouse, based solely on the insured’s change in marital status.
Security Breaches: SB 30 (Chapter 103)
Effective Date: October 1, 2019
This new legislation requires an insurer, a managing general agent, or a third-party administrator to notify the Insurance Commissioner that a breach of a security system has occurred if, after investigation, it is determined that there is a likelihood that personal information has been or will be misused. This notification would be in addition to compliance with other state and federal laws relating to the protection of privacy of “personal information.”
As you can see, changes have been made to a wide variety of insurance fields. For further information respecting this legislation, please contact Patricia McHugh Lambert at plambert@pklaw.com.
Ms. Lambert has over 25 years of experience in handling complex commercial litigation and insurance matters. Ms. Lambert has worked on national class actions, significant litigation and regulatory matters for Fortune 500 companies. She has also assisted small and mid-sized companies and business executives with contract, real estate and commercial disputes that needed to be resolved quickly and efficiently. Ms. Lambert is best known as an attorney who knows the field of insurance. She has represented insurers, policyholders, and insurance producers in disputes both in court and before the Maryland Insurance Administration. She can be contacted by phone at 410-339-6759 or email at mailto:plambert@pklaw.com.
