Requires that insurance policies for property damage, personal injuries, and indemnification other than payment of compensation for workers compensation, state policy limits and no amount of the policy may be used to pay costs to defend a claim.

What This Bill Does

This Rhode Island bill would change the rules for certain types of insurance policies — specifically those that cover property damage, personal injuries, and other liability situations (not including workers' compensation). Under current practice, when someone files a claim against a policyholder, the insurance company can use money from the policy to pay for lawyers and legal defense costs, which can eat into the total amount available to pay the actual victim. This bill would require that insurance policies clearly state their coverage limits *and* that none of that money can be spent on defense costs.

Who It Affects and How

This bill would affect insurance companies, businesses, and individuals who carry liability insurance in Rhode Island. For people who are injured or have property damaged by someone else, this could be significant — it would mean the full policy amount would be available to compensate them, rather than being reduced by legal fees paid to defend the person who caused the harm. For policyholders (like businesses or homeowners), it could mean insurance companies might need to either raise premiums to cover separate defense costs or restructure how their policies are written, since defending claims would need to be funded separately from the stated coverage limit.

Where It Stands

The bill has been introduced and referred to the Senate Judiciary Committee, meaning it is in the early stages of the legislative process and has not yet been voted on.