SCS/SB 726 - This act provides that no arbitration award shall be binding, admissible in evidence, or provide the basis for any judgment or decree against any insurer, as defined in the act, unless the insurer has agreed in writing to the arbitration proceeding. Any arbitration award shall not be subject to garnishment, enforcement, or collection from any liability insurer unless the insurer as agreed in writing to the written arbitration agreement. Unless otherwise required by the insurance contract, an insurer's election to not participate in arbitration shall not constitute or be construed as bad faith. These provisions shall not apply to any arbitration award arising out of an arbitration agreement preceding the date of injury or loss.
Currently, any person having an unliquidated claim for damages against a tort-feasor may enter into a contract with the tort-feasor or any insurer to limit judgments to specified assets provided that the insurer has the opportunity to defend the tort-feasor without reservation but refuses to do so. This act provides that such person may enter into a contract with the tort-feasor or any insurer if the insurer has refused to withdraw a reservation of rights or declined coverage for such unliquidated claim.
Under current law, the insurer shall be provided with written notice of the execution of the contract and shall have 30 days to intervene before a judgment may be entered against a tort-feasor who has entered into such a contract. This act provides that for actions seeking a judgment on a claim against a tort-feasor pending at the time of execution of the contract, the tort-feasor is required to provide the insurer with a copy of the executed contract and a copy of the action within 30 days of execution of the contract. For actions which were pending at the time of execution but were later dismissed, the tort-feasor shall provide the insurer with a copy of the executed contract and the action within 30 days of any refiling of the action or the filing of any subsequent action seeking a judgment on the claim. If no action is pending at the time of the execution of any contract, the tort-feasor shall provide notice within 30 days after notice of any action. Judgment shall not be entered against any tort-feasor until the insurer has received written notice for at least 30 days. Furthermore, the act specifies that the insurers have the unconditional right to intervene in any pending civil action involving the claim for damages within 30 days of receiving notice.
This act provides that insurers intervening in a court proceeding where the defendant has contracted to limit his or her liability to specified assets shall have all the same rights and defenses as are afforded to the tort-feasor, including any rights or defenses that would have been available in the absence of a contract. These provisions shall not alter or reduce an intervening insurer's obligations to any insureds other than the tort-feasor, including any co-insureds.
All terms of any covenant not to execute or of any contract to limit recovery to specified assets shall be in writing and signed by the parties. No unwritten terms shall be enforceable against any party, liability insurer, or any other person.
In actions for bad faith, any agreement between the tort-feasor and the insured shall be admissible in evidence. Furthermore, the exercise of any rights under this act shall not be construed as bad faith.
This act is similar to in SS#1/SCS/SB 591 (2020), HCS/SCS/SB 662 (2020), SCS/HB 2049 (2020), SCS/SB 49 (2019), HB 120 (2019), and SCS/HB 186 (2019).
KATIE O'BRIEN