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§ 3-1701. Actions against insurance providers to determine coverage

West's Annotated Code of MarylandCourts and Judicial ProceedingsEffective: October 1, 2016

West's Annotated Code of Maryland
Courts and Judicial Proceedings
Title 3. Courts of General Jurisdiction--Jurisdiction/Special Causes of Action (Refs & Annos)
Subtitle 17. Liability of Insurer (Refs & Annos)
Effective: October 1, 2016
MD Code, Courts and Judicial Proceedings, § 3-1701
§ 3-1701. Actions against insurance providers to determine coverage
Definitions
(a)(1) In this subtitle the following words have the meanings indicated.
(2) “Casualty insurance” has the meaning stated in § 1-101 of the Insurance Article.
(3) “Commercial insurance” has the meaning stated in § 27-601 of the Insurance Article.
(4)(i) “Disability insurance” means insurance that provides for lost income, revenue, or proceeds in the event that an illness, accident, or injury results in a disability that impairs an insured's ability to work or otherwise generate income, revenue, or proceeds that the insurance is intended to replace.
(ii) “Disability insurance” does not include payment for medical expenses, dismemberment, or accidental death.
(5) “Good faith” means an informed judgment based on honesty and diligence supported by evidence the insurer knew or should have known at the time the insurer made a decision on a claim.
(6) “Insurer” has the meaning stated in § 1-101 of the Insurance Article.
(7) “Property insurance” has the meaning stated in § 1-101 of the Insurance Article.
Application of subtitle
(b) This subtitle applies only to first-party claims under property and casualty insurance policies or individual disability insurance policies issued, sold, or delivered in the State.
Actions filed after final decision
(c)(1) Except as provided in paragraph (2) of this subsection, a party may not file an action under this subtitle before the date of a final decision under § 27-1001 of the Insurance Article.
(2) Paragraph (1) of this subsection does not apply to an action:
(i) Within the small claim jurisdiction of the District Court under § 4-405 of this article;
(ii) If the insured and the insurer agree to waive the requirement under paragraph (1) of this subsection; or
(iii) Under a commercial insurance policy on a claim with respect to which the applicable limit of liability exceeds $1,000,000.
Application of section to civil actions
(d) This section applies only in a civil action:
(1)(i) To determine the coverage that exists under the insurer's insurance policy; or
(ii) To determine the extent to which the insured is entitled to receive payment from the insurer for a covered loss;
(2) That alleges that the insurer failed to act in good faith; and
(3) That seeks, in addition to the actual damages under the policy, to recover expenses and litigation costs, and interest on those expenses or costs, under subsection (e) of this section.
Damages, expenses, and costs recovered from insurer
(e) Notwithstanding any other provision of law, if the trier of fact in an action under this section finds in favor of the insured and finds that the insurer failed to act in good faith, the insured may recover from the insurer:
(1) Actual damages, which actual damages may not exceed the limits of the applicable policy;
(2) Expenses and litigation costs incurred by the insured in an action under this section or under § 27-1001 of the Insurance Article or both, including reasonable attorney's fees; and
(3) Interest on all actual damages, expenses, and litigation costs incurred by the insured, computed:
(i) At the rate allowed under § 11-107(a) of this article; and
(ii) From the date on which the insured's claim would have been paid if the insurer acted in good faith.
Action by insurer within statutory or regulatory time period
(f) An insurer may not be found to have failed to act in good faith under this section solely on the basis of delay in determining coverage or the extent of payment to which the insured is entitled if the insurer acted within the time period specified by statute or regulation for investigation of a claim by an insurer.
Attorney’s fees
(g) The amount of attorney's fees recovered from an insurer under subsection (e) of this section may not exceed one-third of the actual damages recovered.
Verdict or final disposition filed with Maryland Insurance Administration
(h) The clerk of the court shall file a copy of the verdict or any other final disposition of an action under this section with the Maryland Insurance Administration.
Civil action for damages or other remedies
(i) This section does not limit the right of any person to maintain a civil action for damages or other remedies otherwise available under any other provision of law.
Jury trial
(j) If a party to the proceeding elects to have the case tried by a jury in accordance with the Maryland Rules, the case shall be tried by a jury.

Credits

Added by Acts 2007, c. 150, § 1, eff. Oct. 1, 2007. Amended by Acts 2016, c. 729, § 1, eff. Oct. 1, 2016.

Editors' Notes

HISTORICAL AND STATUTORY NOTES
2016 Legislation
Acts 2016, c. 729, § 1, in (a), added (4) and redesignated former (4) to (6) as (5) to (7); in (b) inserted “or individual disability insurance policies”.
Acts 2016, c. 729, § 2, provides:
“SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall be construed to apply only prospectively and may not be applied or interpreted to have any effect on or application to any first-party claim based on an act or omission that occurs before the effective date of this Act.”
MD Code, Courts and Judicial Proceedings, § 3-1701, MD CTS & JUD PRO § 3-1701
Current through legislation effective July 1, 2019, from the 2019 Regular Session of the General Assembly.
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