Gavel to Gavel: Oklahoma’s proposed Homeowner Claims Bill of Rights

A proposed new law being considered by the Oklahoma Legislature this term is House Bill 2933, containing, among other things, the “Homeowner Claims Bill of Rights.” HB 2933 also establishes certain civil penalties for the Insurance Commissioner to enforce, as well as reporting requirements regarding policies sold, nonrenewed and cancelled, and claims filed and resolved. Further, it establishes an administrative mediation procedure for claims to be potentially resolved before litigation is filed. On page 35 of the 49-page bill, the proposed law establishes a new Bill of Rights for the homeowner in Oklahoma.

This statutory Bill of Rights is required to be provided to an insurance claimant by their insurance company within 14 days of being notified of a claim. This Bill or Rights must include “at a minimum” certain language letting the insured know that these rights are specific to the claims process and not representative of all of their rights under Oklahoma law and that it will not prohibit the insurer from exercising their right to make repairs under the terms of the policy. The further specifics include:

• The insured is to receive an acknowledgment of their claim within 14 days of notifying the carrier.
• The insured is to fill out a specific “Proof of Loss” form, and within 30 days of receiving this executed statement, the insurance company is to confirm with the claimant whether it will accept or deny the claim, or whether further investigation is necessary.
• The insured is to receive a copy of any detailed estimate generated by the insurance company adjuster within seven days of its preparation.
• Within 60 days of the claimant submitting the Proof of Loss form, the carrier is to either provide full settlement payment for the claim or payment of the undisputed portion of the claim, notify the homeowner that the claim has been denied, or provide notice that more time is needed to investigate and state the reasons why.
• If more time is needed at this point, the insurance carrier will then have 90 days from the date of the executed Proof of Loss statement to either accept or deny. In the event of a weather-related catastrophe or a major natural disaster, as declared by the Governor, the Insurance Commissioner may approve a request to extend this 90 days by another 20 days, but no further.
• The insured is instructed to contact the Insurance Department with any assistance needed or questions regarding the handling of the claim.
• The insured is advised to a) file all claims directly with the insurance company (as opposed to through an agent), b) contact their insurer before entering into repair contracts, c) keep receipts and photographs, d) document emergency repairs, e) read their policy carefully regarding out of pocket expenses, f) confirm that their contractor is actually licensed and insured, and g) to take precautions if leaving a damaged home by turning off the gas, electricity, etc.

HB 2933 further states “Any violation of this section shall be a violation of the Unfair Claims Settlement Practices Act,” which would allow the Insurance Commissioner, after a hearing and opportunity to be heard, to subject the insurer to civil penalties as allowed under the statute, which include fines up to $10,000. It is important to note that UCSPA claims are regulatory in nature and do not provide for a civil cause of action in district court.

The purpose of this Homeowner Bill of Rights is to summarize, in simple, nontechnical terms, existing Oklahoma law regarding the rights of policy holders. Existing law, however, does not provide such a heavily regulated timeframe for investigating complex claims or roofing issues that require additional investigation (such as the retention of an engineer to inspect the property).

This Bill of Rights also ties itself to the Unfair Claims Settlement Practices Act and allows for certain punishments for violations to be determined by the Insurance Commissioner. HB 2933 contains many other aspects of regulating claims involving property and casualty claims in what appears to be an effort to dramatically speed up the processing of a claim and to allow for certain appeal rights when claims are denied. Whether this Bill of Rights is an effective tool to curtail potentially lengthy and expensive claims remains to be seen. Regardless, applying these additional layers of requirements – from quarterly reporting to a streamlined investigation processes – will certainly become an important consideration for insurance carriers in Oklahoma.