SECTION 1. Chapter 27-5 of the General Laws entitled "Fire Insurance Policies and Reserves" is hereby amended by adding thereto the following section: 27-5-3.10. Minimum limitations standards for structural property claims -- Disclosures -- Void contractual shortening -- Claim closure restrictions.
(a) Applicability. This section applies to any claim, including claims asserted by an insured, claimant, beneficiary, or assignee, for loss of or damage to real property, structures, buildings, dwellings, improvements to real property, or any part thereof, arising under any property insurance policy issued, delivered, renewed, or in effect in this state, including surplus lines policies.
(b) Minimum limitations standards; voidness. No policy provision, endorsement, condition, limitation, agreement, discount, premium credit, or other consideration shall shorten the time within which an insured, beneficiary, claimant, or assignee may pursue benefits, invoke appraisal, or commence an action or otherwise assert a right to payment or performance, including any right to supplemental payment, reopened claim benefits, or additional benefits for the same occurrence, to recover amounts due, to less than the minimum limitations standards established by this section and §§ 27-5-3, 27-5-9.1, and 9-1-13(a), as applicable. Any such provision or attempt is void and unenforceable as against public policy.
(c) Fire or lightning claims. Claims caused by fire or lightning shall not be limited to a period shorter than twenty-four (24) months next after inception of the loss as provided in § 27-5- 3. For purposes of this subsection, “inception of the loss” means the first day on which direct physical damage caused by fire or lightning was discovered or reasonably should have been discovered.
(d) All other structural property damage claims. For any claim for loss of or damage to real property, structures, buildings, dwellings, or improvements to real property arising from any peril or cause other than fire or lightning, the minimum limitations period shall be ten (10) years next after inception of the loss, consistent with § 9-1-13(a), unless a shorter limitations period is expressly provided by statute. For progressive, hidden, or intermittent damage, “inception of the loss” means the first day on which the direct physical damage was discovered or in the exercise of reasonable diligence should have been discovered.
(e) Payments; claim closure; restrictive legends prohibited. No insurer, and no person or entity acting directly or indirectly on behalf of or at the direction of an insurer, shall state, imply, or represent that a claim is closed, satisfied, settled in full, paid in full, or otherwise extinguished, or that any right or benefit is waived, by reason of including, but not limited to, any payment, partial payment, claim-file status designation, internal notation, payment instrument legend, restrictive endorsement, or other unilateral act, absent a formal written release executed pursuant to chapter 9.1 of title 27 (“unfair claims settlement practices act”) and executed by the claimant or insured, witnessed by at least one disinterested adult witness, and notarized by a notary who is not an employee, agent, adjuster, or vendor of the insurer.
(f) Neglect; resulting damage. Nothing in this section shall relieve an insurer of liability for direct physical damage proximately caused by a covered peril; however, an insurer may deny coverage only for additional or resulting damage, and only to the extent proven to have been caused by the claimant’s neglect in failing to take reasonable and necessary precautions to protect the property from further damage after the claimant knew or reasonably should have known of the damage.
(g) Required disclosures. The director of business regulation shall require that every insurer providing coverage for structural property damage claims in this state, including surplus lines carriers, provide written notice to the insured or claimant that accurately states the applicable minimum limitations standards under this section and §§ 27-5-3 and 9-1-13(a), as applicable, and that issuance, acceptance, endorsement, negotiation, or deposit of any payment does not constitute full and final settlement absent a formal written release executed in strict compliance with chapter 9.1 of title 27 (“unfair claims settlement practices act”), if enacted. The notice shall be provided at first notice of loss and again with any payment issued.
(h) Department of business regulation form approval. The director of the department of business regulation shall not approve, and shall withdraw approval of, any form, endorsement, condition, limitation, or claims-handling notice for any policy providing coverage on any dwelling, residential structure, or commercial structure in this state that contains any provision inconsistent with this section.
(i) Enforcement; cumulative remedies. A violation of this section, or any attempt to circumvent this section, including through any third-party administrator, vendor, independent adjuster, consultant, engineer, or other intermediary, shall constitute an unfair or deceptive act or practice and an unfair claims settlement practice, enforceable by the department of business regulation, the attorney general, and any private party as otherwise provided by law, including under chapter 13.1 of title 6 (“deceptive trade practices”), chapter 9.1 of title 27 (“unfair claims settlement practices act”), and § 9-1-33. The remedies for violations of this section are cumulative and in addition to any other remedies available at law or in equity.
(j) Rules and regulations. The director of business regulation is authorized and directed to promulgate rules and regulations to implement and enforce this section, including standardized disclosure language, font size, and placement on declarations pages and claim communications.
SECTION 2. This act shall take effect upon passage.
