§ 27-14.3-42 - Special provisions for third party claims.
SECTION 27-14.3-42
§ 27-14.3-42 Special provisions for thirdparty claims. – (a) Whenever any third party asserts a cause of action against an insured of aninsurer in liquidation, the third party may file a claim with the liquidator.
(b) Whether or not the third party files a claim, the insuredmay file a claim on his or her own behalf in the liquidation. If the insuredfails to file a claim by the date for filing claims specified in the order ofliquidation or within sixty (60) days after the mailing of the notice requiredby § 27-14.3-26, whichever is later, he or she is an unexcused late filer.
(c) The liquidator shall make his or her recommendations tothe court under § 27-14.3-46 for the allowance of an insured's claim undersubsection (b) of this section after consideration of the probable outcome ofany pending action against the insured on which the claim is based, theprobable damages recoverable in the action, and the probable costs and expensesof defense. After allowance by the court, the liquidator shall withhold anydividends payable on the claim, pending the outcome of litigation andnegotiation with the insured. Whenever it seems appropriate, he or she shallreconsider the claim on the basis of additional information and amend his orher recommendations to the court. The insured shall be afforded the same noticeand opportunity to be heard on all changes in the recommendation as in itsinitial determination. The court may amend its allowance as it thinksappropriate. As claims against the insured are settled or barred, the insuredshall be paid from the amount withheld the same percentage dividend as was paidon other claims of similar property, based on the lesser of: (1) the amountactually recovered from the insured by action or paid by agreement plus thereasonable costs and expense of defense, or (2) the amount allowed on theclaims by the court. After all claims are settled or barred, any sum remainingfrom the amount withheld shall revert to the undistributed assets of theinsurer. Delay in final payment under this subsection shall not be a reason forunreasonable 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, andthe aggregate allowed amount of the claims to which the same limit of liabilityin the policy is applicable exceeds that limit, each claim as allowed shall bereduced 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 thissection, the freed amount shall be apportioned ratably among the claims whichhave been reduced under this subsection.
(e) No claim may be presented under this section if it is ormay be covered by any guaranty association or foreign guaranty association.