Penalties Remain for Late Payments on No Fault

In the legislative session which just ended the New York State Trial Lawyers Association ( and other consumer groups were able to hold-back an insurance industry bill which would have de-penalized insurance company’s late payments under No Fault.

The No Fault Law requires that in an automobile accident the claimant’s insurance company to pay medical and lost income claims within 30 days of presentation.  Under the No Fault rules, if the insurance company wrongfully does not pay a claim within 30 days, then there is a penalty of 2% per month compounded.

This rule has been upheld by New York’s highest court.  The Court of Appeals went further and stated that if the insurance company does not pay within 30 days and does not present a compelling reason for non-payment, such as fraud, then the insurance company is precluded from contesting the claim.  In other words, the insurance company would have no justifiable excuse for non-payment.  The insurance industry sought to abolish this rule.

This is a victory for the general public as well as the medical community.

Mark E. Seitelman, 6/27/08,




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