House Bill 1280

AN ACT TO PROVIDE THAT INSURANCE COMPANIES MUST PAY ON A TIMELY BASIS THE BENEFITS PROVIDED UNDER THE TERMS OF AUTOMOBILE, HOMEOWNERS, AND FLOOD, HURRICANE OR WINDSTORM INSURANCE POLICIES, OR IN THE ALTERNATIVE, PAY INTEREST ON CLAIMS NOT PAID ON A TIMELY BASIS; TO PROVIDE FOR THE CALCULATION OF INTEREST ON CLAIMS THAT ARE NOT PAID ON A TIMELY BASIS; 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, the benefits provided under the terms of its automobile, homeowners, and any type of flood, hurricane or windstorm insurance policies.

(2) If benefits are not paid on a timely basis and there is later an award against the insurer by a court of law, the benefits paid to the insured, an individual or entity directly entitled to benefits under its insured’s contract of insurance, or third party tort claimant, shall bear simple interest that shall begin to accrue thirty (30) days from the date the initial insurance claim was filed at the rate of twelve percent (12%) per annum. The interest shall be paid in addition to and at the time of payment of loss. If the loss exceeds the limits of insurance coverage available, interest shall be payable based upon the limits of the insurance coverage rather than the amount of the loss. If payment is offered by the insurer but is rejected by the claimant, and the claimant does not subsequently recover an amount in excess of the amount offered, interest is not due. Interest paid pursuant to this section shall not act to preclude an award against the insurer for any punitive damages, court costs, attorney fees, or any other general and special damages elsewhere allowed by law.

(3) 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 surety or casualty business in this state.

(b) "Timely basis" means payment of a claim within ninety (90) 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.