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§27-14.3-42  Special provisions for third party claims. –

Published: 2015

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CHAPTER 27-14.3

Insurers' Rehabilitation and Liquidation Act

SECTION 27-14.3-42

   § 27-14.3-42  Special provisions for third

party claims. –

(a) Whenever any third party asserts a cause of action against an insured of an

insurer in liquidation, the third party may file a claim with the liquidator.

   (b) Whether or not the third party files a claim, the insured

may file a claim on his or her own behalf in the liquidation. If the insured

fails to file a claim by the date for filing claims specified in the order of

liquidation or within sixty (60) days after the mailing of the notice required

by § 27-14.3-26, whichever is later, he or she is an unexcused late filer.

   (c) The liquidator shall make his or her recommendations to

the court under § 27-14.3-46 for the allowance of an insured's claim under

subsection (b) of this section after consideration of the probable outcome of

any pending action against the insured on which the claim is based, the

probable damages recoverable in the action, and the probable costs and expenses

of defense. After allowance by the court, the liquidator shall withhold any

dividends payable on the claim, pending the outcome of litigation and

negotiation with the insured. Whenever it seems appropriate, he or she shall

reconsider the claim on the basis of additional information and amend his or

her recommendations to the court. The insured shall be afforded the same notice

and opportunity to be heard on all changes in the recommendation as in its

initial determination. The court may amend its allowance as it thinks

appropriate. As claims against the insured are settled or barred, the insured

shall be paid from the amount withheld the same percentage dividend as was paid

on other claims of similar property, based on the lesser of: (1) the amount

actually recovered from the insured by action or paid by agreement plus the

reasonable costs and expense of defense, or (2) the amount allowed on the

claims by the court. After all claims are settled or barred, any sum remaining

from the amount withheld shall revert to the undistributed assets of the

insurer. Delay in final payment under this subsection shall not be a reason for

unreasonable delay of the final distribution and discharge of the liquidator.

   (d) If several claims founded upon one policy are filed,

whether by third parties or as claims by the insured under this section, and

the aggregate allowed amount of the claims to which the same limit of liability

in the policy is applicable exceeds that limit, each claim as allowed shall be

reduced in the same proportion so that the total equals the policy limit.

Claims by the insured shall be evaluated as in subsection (c) of this section.

If any insured's claim is subsequently reduced under subsection (c) of this

section, the freed amount shall be apportioned ratably among the claims which

have been reduced under this subsection.

   (e) No claim may be presented under this section if it is or

may be covered by any guaranty association or foreign guaranty association.

History of Section.

(P.L. 1993, ch. 248, § 1.)