The New York Department of Financial Services (DFS) has issued an industry guidance to all insurers, licensed producers, adjusters and reinsurers in light of the statute of limitations window that has been opened in New York for child abuse victim claims, advising all of the above parties that the DFS "expects them to cooperate fully with the intent of the Child Victims Act."
Prior to the Child Victims Act, New York had a very narrow statute of limitations for child sex abuse claims. Both criminal and civil cases generally had to be filed before the plaintiff turned 23, with some exceptions; civil suits against institutions, for example, had a cutoff age of 21. The new Child Victims Act raises the survivor's maximum age under the statute of limitations to 28 in criminal cases and 55 in civil suits. On August 14, the day the window opened, 439 cases were filed in New York.
Some key language from the industry guidance:
- "This includes when insurance coverage applies to CVA-related claims...[We] encourage[ ] all Addressees with potential exposure to CVA-related legal claims to act promptly and in utmost good faith and to exercise best practices with their prior and current policyholders, and their respective claimants, including properly performing any and all duties to defend CVA-related claims."
- "This Department encourages Insurers to do more than the minimum required."
- "Have as your basic goal the prompt and fair settlement of all claims...Do not demand verification of facts unless there are good reasons to do so. When verification of facts is necessary, it should be done as expeditiously as possible...fairly review such policies, interpreting such contracts so as to resolve any ambiguities in the policyholders' favor."
The DFS also sent another strong message by reminding policyholders and victims that the department may be a helpful resource. As a result, both insurers and policyholders should be aware of the new industry guidance and its potential implications on the claims handling process. Whether this will lead to less policyholder coverage litigation remains to be seen.
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