Strengthens consumer protections in insurance claims by expanding definitions of unfair claims settlement practices and clarifies an insured’s right to pursue bad-faith remedies.

Rhode Island Bill Summary: Insurance Consumer Protections

This bill strengthens the rights of Rhode Island residents when dealing with insurance companies over claims. It expands the legal definition of "unfair claims settlement practices," which are actions that insurance companies are prohibited from taking when handling a policyholder's claim. By broadening this definition, the bill makes it clearer what kinds of behavior — such as unreasonably delaying payments, denying valid claims without proper justification, or acting in bad faith — can be considered violations of the law.

The bill also clarifies that policyholders have the right to sue their insurance company directly if the company acts in "bad faith" when handling their claim. Bad faith generally means the insurance company is not dealing honestly or fairly with the person they insure. Currently, there may be confusion or legal uncertainty about whether and how a person can take their insurance company to court for this kind of conduct. This bill aims to make that pathway clearer and more accessible to everyday consumers.

This legislation would primarily affect Rhode Island residents who have insurance policies — including home, auto, health, or other types of coverage — as well as the insurance companies that operate in the state. For consumers, it could mean stronger legal protections and a clearer ability to hold insurers accountable. For insurance companies, it could mean greater legal exposure and stricter standards for how they handle claims.

As of now, the bill has been referred to the House Corporations Committee and is scheduled for a hearing in February 2026, but it has not yet been passed into law.