Section 628.46. Timely payment of claims.

 

(1)  Unless otherwise provided by law, an insurer shall promptly pay every insurance claim. A claim shall be overdue if not paid within 30 days after the insurer is furnished written notice of the fact of a covered loss and of the amount of the loss. If such written notice is not furnished to the insurer as to the entire claim, any partial amount supported by written notice is overdue if not paid within 30 days after such written notice is furnished to the insurer. Any part or all of the remainder of the claim that is subsequently supported by written notice is overdue if not paid within 30 days after written notice is furnished to the insurer. Any payment shall not be deemed overdue when the insurer has reasonable proof to establish that the insurer is not responsible for the payment, notwithstanding that written notice has been furnished to the insurer. For the purpose of calculating the extent to which any claim is overdue, payment shall be treated as being made on the date a draft or other valid instrument which is equivalent to payment was placed in the U.S. mail in a properly addressed, postpaid envelope, or, if not so posted, on the date of delivery. All overdue payments shall bear simple interest at the rate of 12 percent per year.

(2)  Notwithstanding sub. (1) , the payment of a claim shall not be overdue until 30 days after the insurer receives the proof of loss required under the policy or equivalent evidence of such loss. The payment of a claim shall not be overdue during any period in which the insurer is unable to pay such claim because there is no recipient who is legally able to give a valid release for such payment, or in which the insurer is unable to determine who is entitled to receive such payment, if the insurer has promptly notified the claimant of such inability and has offered in good faith to promptly pay said claim upon determination of who is entitled to receive such payment.

(2m)  

(a) Notwithstanding subs. (1) and (2) and except as provided in par. (b) , a claim for payment for chiropractic services is overdue if not paid within 30 days after the insurer receives clinical documentation from the chiropractor that the services were provided unless, within those 30 days, the insurer provides to the insured and to the chiropractor the written statement under s. 632.875 (2) .

(b) Paragraph (a) does not apply to any of the following:

1. Worker's compensation insurance.

2. Any line of property and casualty insurance except disability insurance. In this subdivision, “disability insurance" does not include uninsured motorist coverage, underinsured motorist coverage, or medical payment coverage.

(3)  This section applies only to the classes of claims enumerated in s. 646.31 (2) .

1975 c. 375 ; 1979 c. 109 s. 16 ; 1979 c. 110 s. 60 (13) ; 1981 c. 38 s. 24 ; Stats. 1981 s. 628.46; 2001 a. 16 , 65 . Receipt of a legally binding offer to settle a claim against the insured is not required for the insured to have a claim against the insurer for bad-faith failure to settle. Alt v. American Family Mutual Insurance Co. 71 Wis. 2d 340 , 237 N.W.2d 706 (1976). An insured may bring a tort action against an insurer for failure to exercise good faith in settling the insured's claim. This section is unrelated to such a tort action. Anderson v. Continental Insurance Co. 85 Wis. 2d 675 , 271 N.W.2d 368 (1978). The tort of bad faith handling of a claim is discussed. Davis v. Allstate Ins. Co. 101 Wis. 2d 1 , 303 N.W.2d 596 (1981). A third-party claimant cannot assert a bad faith claim against an insurer. Kranzush v. Badger State Mutual Casualty Co. 103 Wis. 2d 56 , 307 N.W.2d 256 (1981). This section applies to service insurance corporations. Physicians Service Insurance Corp. v. Mitchell, 114 Wis. 2d 338 , 338 N.W.2d 326 (Ct. App. 1983). A jury's imposition of punitive damages and finding of bad faith is adequate to show that the insurer did not have reasonable proof that it was not responsible for a claim and supports an award of prejudgment interest under sub. (1). Upthegrove v. Lumbermans Mutual Insurance Co. 146 Wis. 2d 470 , 431 N.W.2d 689 (Ct. App. 1988). Interest under s. 807.01 (4) is not in addition to interest under sub. (1). Upthegrove v. Lumbermans Insurance Co. 152 Wis. 2d 7 , 447 N.W.2d 367 (Ct. App. 1989). This section makes no distinction between the payment of claims based on judgments and all other claims; a claim may be due under sub. (2) far in advance of a judgment or award. Fritsche v. Ford Motor Credit Co. 171 Wis. 2d 280 , 491 N.W.2d 119 (Ct. App. 1992). Whether to assess 12 percent interest is dependent on whether the insurer had reasonable proof establishing that it was not responsible for payment. U.S. Fire Insurance Co. v. Good Humor Corp. 173 Wis. 2d 804 , 496 N.W.2d 730 (Ct. App. 1993). This section applies to the insurance company of a negligent tortfeasor and, thus, allows the recovery of interest by a 3rd-party claimant. When there is clear liability, a sum certain owed, and written notice of both, the plain language of this section, incorporating by reference s. 646.31 (2), imposes 12 percent simple interest on overdue payments to 3rd-party claimants. Kontowicz v. American Standard Insurance Co. of Wisconsin, 2006 WI 48 , 290 Wis. 2d 302 , 714 N.W.2d 105 , 03-2177 . An insurer's subrogation interest did not permit it to step into the insured's shoes to assert a 12 percent interest claim under the facts and circumstances of the case. Legal subrogation gives indemnity only, and an insurer who possesses a cause of action for subrogation cannot recover beyond the amount actually dispersed by it. Zurich American Insurance Company v. Wisconsin Physicians Services Insurance Corporation, 2007 WI App 259 , 306 Wis. 2d 617 , 743 N.W.2d 710 , 06-2320 . “Reasonable proof" in sub. (1) means that amount of information that is sufficient to allow a reasonable insurer to conclude that it may not be responsible for payment of a claim. Generally, reasonable proof is equated with whether coverage is considered “fairly debatable." An insurer should not have been penalized for exercising its right to litigate when policy language was ambiguous, the court of appeals was divided on the question of coverage, the issue of coverage was one of 1st impression in this state, and administrative rules were subsequently modified to clarify required coverage. Froedtert Memorial Lutheran Hospital, Inc. v. National States Insurance Company, 2009 WI 33 , 317 Wis. 2d 54 , 765 N.W.2d 251 , 07-0934 . This section is limited to situations where an insurer fails to pay an insurance claim within 30 days. In this case an insurer failed to pay a contractual settlement of an insurance claim within 30 days. There is no authority for the proposition that this section can apply when an insurer fails to pay an amount required by a settlement agreement resolving a disputed claim. Singler v. Zurich American Insurance Company, 2014 WI App 108 , 357 Wis. 2d 604 , 855 N.W.2d 707 , 14-0391 . The purpose of this section is to discourage insurance companies from creating unnecessary delays in paying claims and to compensate claimants for the value of the use of their money. If the insurer has “reasonable proof" that it is not responsible, the statute does not apply. Reasonable proof of nonresponsibility is equated with whether the “coverage issue was fairly debatable." Dilger v. Metropolitan Property and Casualty Insurance Company, 2015 WI App 54 , 364Wis. 2d 410, 868 N.W.2d 177 , 14-1851 . This section applies to all insurers. Allison v. Ticor Title Ins. Co. 979 F.2d 1187 (1992). Excess liability insurance. Griffin. 62 MLR 375 (1979).