NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7640
SPONSOR: Weisenberg TITLE OF BILL: An act to amend the navigation law, in relation to
claims against insurers for petroleum spills
PURPOSE: Protects homeowners from the onerous costs related to the
remediation of petroleum discharges on residential property. Unless the
insurer prevails on the affirmative defense, the standard homeowner's
insurance policy -should cover the claim.
SUMMARY OF PROVISIONS: Section 1 amends section.190 of the Navigation
Law to add the following:
(a) requires all homeowners' policies of insurance to cover the cleanup
and removal costs and all direct and indirect damages relating to a
discharge of petroleum;
(b) establishes an affirmative defense against a claim, for coverage of
the costs and damages relating to a discharge of petroleum if the
insured had actual knowledge of a condition which a reasonable person
would have understood to pose an imminent risk of a discharge of petro-
leum and that the insured failed to take reasonable steps to prevent the
discharge;
(c) requires insurers to provide notice in every homeowner's policy,
newly issued or renewed which insures against damage to property that
states in part "You have a responsibility to prevent a discharge from
your petroleum tanks and associated pipelines"; and
(d) establishes that nothing in this section shall be construed to limit
any pre-existing right in which the insured may have had compensation
from the insurer for cleanup and removal costs and all direct and indi-
rect damages relating to the discharge of petroleum.
Section 2 provides for an effective date of the first of January next
succeeding the date on which it shall have become a law.
BACKGROUND AND JUSTIFICATION: A petroleum discharge or spill is a
serious threat to the environment. Spills that occur on residential
properties can cost anywhere from several thousand dollars to hundreds
of thousands of dollars to clean up. Many of these spills involve petro-
leum storage systems whose tanks or lines have leaked allowing oil to
seep into the soil and impact groundwater which is a typical source of
drinking water. Remediation may include soil excavation, tank removal
and replacement (if the tank was the source), and groundwater monitoring
or treatment. The homeowner is strictly liable for the discharge or
spill and the subsequent clean-up costs. Insurance companies have
routinely included absolute "pollution exclusions" in all homeowner
policies and denied coverage of these costs. This legislation requires
these costs to be covered in homeowner policies. These cases, though
they often constitute a severe financial burden to individual homeowners
and are a threat to the environment are limited and should not impose a
burden on insurance companies.
Therefore, the Comptroller urges passage of this legislation.
LEGISLATIVE HISTORY: 2009-2010 - S. 5818 and A. 8562
FISCAL IMPLICATIONS: None to the State.
EFFECTIVE DATE: This act shall take effect on the first of January
next succeeding the date on which it shall have become a law.
