1.3 Regulation 64 (11 NYCRR 216) Mandatory Timelines & Unfair Claims Settlement Practices
Key Takeaways
- Regulation 64 (11 NYCRR 216) implements Insurance Law § 2601, which bars unfair claim settlement acts committed without just cause and with such frequency as to indicate a general business practice.
- Insurers have 15 business days to acknowledge a claim, 15 business days to reply to any other pertinent communication, 15 business days to commence investigation, and 10 business days to answer a DFS inquiry.
- Acceptance or rejection must be communicated in writing within 15 business days of a properly executed proof of loss — read as 30 business days when arson is suspected.
- If more time is needed, the first delay letter is due within the same 15 business days, and further letters are due 90 days later and every 90 days thereafter.
- Any amount finally agreed upon must be paid within five business days under 216.6(f), and 216.6(b) defines ACV to include all sales taxes paid or payable on the item repaired or replaced.
Regulation 64 (11 NYCRR 216) Mandatory Timelines & Unfair Claims Settlement Practices
Exam Focus: Regulation 64 is the most heavily tested regulatory subject on the Series 17-70 exam. Master the exact operational milestones: 15 business days to acknowledge, to reply to other pertinent communications, to commence investigation and to accept or reject after proof of loss; 30 business days to decide when arson is suspected; 10 business days to answer a DFS inquiry; 90 days between continuing delay letters; and five business days to pay an agreed settlement.
Legal Foundation: NY Insurance Law § 2601 & Regulation 64
New York Insurance Law § 2601 establishes the statutory prohibition against Unfair Claims Settlement Practices. To implement § 2601, the Department of Financial Services promulgated Regulation 64 (codified at 11 NYCRR Part 216).
The purpose of Regulation 64 is to establish rigorous operational standards that guarantee the prompt, fair, and equitable settlement of claims for policyholders and claimants across New York. It applies to all insurers authorized to transact business in the state.
The “General Business Practice” Standard
Under NY Insurance Law § 2601, an isolated clerical mistake does not automatically constitute an unfair settlement practice. The statute requires that prohibited acts be committed without just cause and with such frequency as to indicate a general business practice. However, when regulatory examinations or consumer complaints demonstrate recurring timeline violations, the DFS penalizes such systemic non-compliance as an unlawful business practice.
Regulation 64 Mandatory Operational Timelines
1. Acknowledgment & Forms: 15 Business Days (11 NYCRR 216.4(a))
Within 15 business days of notification of a claim, the insurer must acknowledge receipt of the notice. The acknowledgment may be in writing; if made by other means, an appropriate notation must be made in the claim file. Notice to an agent of the insurer is notice to the insurer, unless the agent tells the claimant that the agent is not authorized to receive claim notices.
2. Other Pertinent Communications: 15 Business Days (11 NYCRR 216.4(b))
An appropriate reply must be made within 15 business days on all other pertinent communications — not just the first notice. This is the rule that catches adjusters who let a claimant's follow-up letter or a public adjuster's demand sit in a queue.
3. Department Inquiries: 10 Business Days (11 NYCRR 216.4(d))
On receipt of any inquiry from the Department of Financial Services about a claim, the insurer must furnish the Department with the available information requested within 10 business days. Every insurer must also maintain an internal consumer services department, headed by a named corporate officer, with authority to change the company's position on an individual file, and must keep an ongoing central complaint log.
4. Commencement of Investigation: 15 Business Days (11 NYCRR 216.5(a))
The insurer must commence an investigation of any claim within 15 business days of notice, and within the same 15 business days must notify the claimant of all items, statements and forms the insurer reasonably requires. Where there is a reasonable basis supported by specific information to suspect fraud, the insurer is relieved of the Part 216 timing requirements while it investigates, and must report the suspect loss to the Department's fraud unit.
5. Claim Acceptance or Rejection: 15 Business Days (11 NYCRR 216.6(c))
Within 15 business days after receipt of a properly executed proof of loss and all requested items, statements and forms, the claimant must be advised in writing of acceptance or rejection.
- Arson Exception: where the insurer suspects the claim involves arson, the 15 business days is read as 30 business days pursuant to Insurance Law § 2601.
- Partial Acceptance: if the claim is accepted in whole or in part, the claimant must be advised in writing of the amount offered.
- Rejection Notice: on rejection, the insurer must notify the claimant in writing of any policy provision limiting the claimant's right to sue (the suit-limitation clause — see Section 1.4 on § 3404).
6. Notice of Inability to Decide & 90-Day Status Letters (11 NYCRR 216.6(c))
If the insurer needs more time to decide, it must notify the claimant within the same 15 business days after receipt of the proof of loss or requested information, and that notice must state the reasons additional time is needed. Thereafter, unless the matter is in litigation or arbitration:
90 days from the date of the initial letter setting forth the need for further time, and every 90 days thereafter, the insurer must send a further letter setting forth the reasons additional time is still needed.
This 90-day cadence is a classic distractor — candidates who guess “30 days” because so many other Regulation 64 clocks run in 15-business-day steps get it wrong.
7. Undisputed Elements Must Be Paid (11 NYCRR 216.6(e))
Where there is no dispute as to one or more elements of a claim, payment for those elements must be made notwithstanding disputes over the rest, provided payment can be made without prejudice to either party.
8. Prompt Settlement Payment: Five Business Days (11 NYCRR 216.6(f))
Every insurer must pay any amount finally agreed upon in settlement of all or part of a claim not later than five business days from receipt of the agreement by the insurer, or from the date the claimant performs any condition set by the agreement, whichever is later.
| Claim Stage | Insurer Action Required | Deadline | Day Metric |
|---|---|---|---|
| Notice of claim | Acknowledge receipt (216.4(a)) | 15 | Business days |
| Any pertinent communication | Appropriate reply (216.4(b)) | 15 | Business days |
| DFS inquiry | Furnish requested information (216.4(d)) | 10 | Business days |
| Notice of claim | Commence investigation + request forms (216.5(a)) | 15 | Business days |
| Proof of loss received | Accept or reject in writing (216.6(c)) | 15 | Business days |
| Proof of loss, arson suspected | Accept or reject in writing (216.6(c)) | 30 | Business days |
| Cannot yet decide | First delay letter with reasons (216.6(c)) | 15 | Business days |
| Still undecided | Further delay letters (216.6(c)) | every 90 | Days |
| Amount finally agreed | Pay the agreed amount (216.6(f)) | 5 | Business days |
Exam Warning: Almost every Regulation 64 deadline is expressed in business days (excluding weekends and legal holidays). The one conspicuous exception is the recurring delay letter under 216.6(c), which the regulation states simply as 90 days.
Actual Cash Value and Sales Tax (11 NYCRR 216.6(b))
Regulation 64 supplies its own definition of ACV for claim-settlement purposes. Unless otherwise defined by law or policy, actual cash value means the lesser of the amounts for which the claimant can reasonably be expected to:
- repair the property to its condition immediately prior to the loss; or
- replace it with an item substantially identical to the item damaged.
Critically, that amount “shall include all monies paid or payable as sales taxes on the item repaired or replaced.” This is the regulatory hook for mandatory sales tax reimbursement on New York total losses — it sits in 216.6(b), not in the automobile subsection.
Drafts, Releases and Rejection Notices (11 NYCRR 216.6(g)–(h))
- No “final settlement” legends on first-party drafts. No insurer may issue a check or draft in payment of a first-party claim or any element of one containing language that expressly or impliedly states that acceptance constitutes a final settlement or release of future obligations arising out of the loss.
- No over-broad releases. No insurer may require execution of a release on a first- or third-party claim that is broader than the scope of the settlement.
- Mandatory DFS complaint legend. Any notice rejecting an element of a personal property insurance claim must carry the insurer's identity and claims processing address, the policy and claim numbers, and a prominently displayed statement telling the insured how to file a complaint with the New York State Department of Financial Services.
Prohibited Unfair Claims Settlement Practices (11 NYCRR 216.3)
Regulation 64 explicitly bars unfair claims settlement practices, including:
- Misrepresentation: Knowingly misrepresenting pertinent facts, policy limits, or policy terms to claimants.
- Investigation Failures: Failing to adopt reasonable standards for prompt investigation of claims.
- Communication Delays: Failing to acknowledge and act reasonably promptly upon communications with respect to claims.
- Compelling Litigation: Compelling insureds to institute litigation by offering substantially less than the amounts ultimately recovered in lawsuits.
- Failing to Settle Promptly: Failing to effectuate prompt, fair, and equitable settlements where liability has become reasonably clear.
- Altered Applications: Settling claims based on an application altered without the insured's knowledge or consent.
- Inadequate Denial Letters: Failing to provide a prompt written explanation of the legal and factual basis for claim denial, specifically citing the policy provisions, exclusions, or conditions relied upon.
- Silent Disclaimers: Failing to inform the claimant in writing, as soon as it is determined, that no policy was in force or that the insurer is disclaiming because the policyholder breached a policy provision — together with the specific reasons (216.6(d)).
Auto Physical Damage Settlement Standards (11 NYCRR 216.7)
Regulation 64 also establishes specific standards for automobile physical damage adjustments, covered in depth in Section 2.3:
- Inspection Deadline: the insurer has six business days following receipt of notice of claim to inspect the damaged vehicle and make a good-faith offer of settlement.
- Anti-Steering Protections: an insurer cannot require repairs at a specific repair facility (NY Insurance Law § 2610); the insured chooses the shop.
- Referral Prohibition (216.7(h)): an insurer may not refer its own insured to the “at fault” party or that party's insurer for settlement of a first-party physical damage claim the insurer is obliged to pay.
Practical Claim Adjustment Scenario
- Mon Oct 5: Insured reports roof damage. The insurer has 15 business days to acknowledge the notice, request the items and forms it needs, and commence investigation.
- Fri Oct 16: Insurer receives the properly executed proof of loss. The 15-business-day determination clock starts.
- Mon Nov 9: Fifteen business days later the insurer must accept, reject, or send a written delay letter stating the specific reasons more time is needed. (If arson were suspected, the deadline would be 30 business days.)
- Sun Feb 7: Ninety days after that first delay letter — and every 90 days after — the insurer must send a further letter explaining why it still needs more time.
- Settlement: Once the parties finally agree on $45,000, payment must be made within five business days of the insurer's receipt of the agreement, or of the claimant's performance of any condition, whichever is later.
Under 11 NYCRR 216.6(f), once an insurer receives a claimant’s executed settlement agreement (and the claimant has performed any condition the agreement imposes), within what period must the insurer pay the amount finally agreed upon?
A policyholder reports a major kitchen fire loss to their insurer on Monday morning. Under New York Regulation 64 (11 NYCRR 216.4), what is the statutory deadline for the insurer to acknowledge receipt of the notice of claim and provide necessary claim forms?
An insurer receives a properly executed proof of loss on a complex commercial water damage claim and cannot determine within 15 business days whether to accept or reject it. What does 11 NYCRR 216.6(c) require?