House Bill 1260

AN ACT TO PROVIDE THAT INSURANCE COMPANIES MUST PAY ON A TIMELY BASIS ALL BENEFITS FOR WHICH IT IS CONTRACTUALLY OBLIGATED TO PAY UNDER THE TERMS OF AUTOMOBILE, HOMEOWNERS, AND FLOOD, HURRICANE OR WINDSTORM INSURANCE POLICIES; TO PROVIDE CONDITIONS UNDER WHICH THE PAYMENT OF CLAIMS SHALL NOT BE CONSIDERED TO BE UNTIMELY; TO PROVIDE THAT AN INSURER THAT FAILS TIMELY TO PAY ALL SUCH BENEFITS SHALL BE PRESUMED TO HAVE ACTED IN BAD FAITH AND SHALL BE LIABLE FOR PUNITIVE DAMAGES IN ADDITION TO BENEFITS DUE UNDER ITS CONTRACT OF INSURANCE; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. (1) An insurer must pay on a timely basis to its insured, an individual or entity directly entitled to benefits under its insured’s contract of insurance, or a third party tort claimant, all benefits for which it is contractually obligated to pay under the terms of its automobile, homeowners, and any type of flood, hurricane or windstorm insurance policies.

(2) Payment of a claim shall not be untimely during any period in which the insurer is unable to pay the claim when there is no recipient who is legally able to give a valid release for the payment, or where the insurer is unable to determine who is entitled to receive the payment, if the insurer has promptly notified the claimant of that inability and has offered in good faith promptly to pay the claim upon determination of who is entitled to receive the payment. Payment also shall not be untimely if the insured, individual or entity directly entitled to benefits under its insured’s contract of insurance, or third party tort claimant, purposefully acts to cause the insurer to delay payment.

(3) If benefits are not paid on a timely basis and there is later an award against the insurer by a court of law, the insurer shall be presumed to have acted in bad faith and, in addition to benefits due under its contract of insurance, shall be liable to the insured, an individual or entity directly entitled to benefits under its insured’s contract of insurance, or third party tort claimant for punitive damages in such amount as the court or jury may award.

(4) For the purposes of this section:

(a) "Insurer" means any domestic or foreign insurance corporation or association engaged in the business of insurance or suretyship which has qualified to transact business in this state.

(b) "Timely basis" means payment of a claim within sixty (60) days after the insurer receives actual notice of a claim from the insured, individual or entity directly entitled to benefits under its insured’s contract of insurance, or third party tort claimant.

SECTION 2. This act shall take effect and be in force from and after July 1, 2007.