S01959 Summary:

BILL NOS01959A
 
SAME ASSAME AS A03774-A
 
SPONSORGOLDEN
 
COSPNSR
 
MLTSPNSR
 
Add S3455, amd SS3420, 5103 & 5201, Ins L; amd S313, V & T L
 
Permits an insurer to rescind or retroactively cancel a policy in circumstance involving an accident staged to defraud an insurer.
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S01959 Memo:

Memo not available
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S01959 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         1959--A
            Cal. No. 52
 
                               2013-2014 Regular Sessions
 
                    IN SENATE
 
                                       (Prefiled)
 
                                     January 9, 2013
                                       ___________
 
        Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
          printed to be committed to the  Committee  on  Insurance  --  reported
          favorably  from  said  committee,  ordered to first report, amended on

          first report, ordered to a second  report,  and  to  be  reprinted  as
          amended, retaining its place in the order of second report
 
        AN  ACT  to  amend the insurance law and the vehicle and traffic law, in
          relation to permitting an insurer to rescind or retroactively cancel a
          policy in certain circumstances
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  The insurance law is amended by adding a new section 3455
     2  to read as follows:
     3    § 3455. Cancellation of policy. (a) An insurer may, within  the  first
     4  sixty  days,  rescind  or  retroactively cancel to the inception a newly
     5  issued  automobile  insurance  policy  subject  to  paragraph   one   of
     6  subsection  (a)  of  section  three thousand four hundred twenty-five of

     7  this article, a newly  issued  commercial  automobile  insurance  policy
     8  subject  to section three thousand four hundred twenty-six of this arti-
     9  cle, or a policy issued pursuant to any plan established  under  article
    10  fifty-three  of  this  chapter,  if  the  initial premium payment is not
    11  honored by a financial institution due to the nonexistence or the  unau-
    12  thorized use of a bank account, or the initial premium payment is denied
    13  by  a  credit  card company due to the unauthorized use of a credit card
    14  account. This section shall not apply to policies required under article
    15  eight of the vehicle and traffic law.
    16    (b) A person who is injured during this period and who would  ordinar-

    17  ily  be  covered  under  the  insured's  policy had it not been canceled
    18  pursuant to subsection (a) of this section, shall be entitled to recover
    19  under his or her own policy subject to the terms and conditions  of  the
    20  contract,  or if the injured person is uninsured, they shall be entitled
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD04362-02-3

        S. 1959--A                          2
 
     1  to recover under the motor vehicle accident indemnification corporation,
     2  provided such person did not participate  in  any  fraudulent  activity,

     3  including, but not limited to, an accident staged to defraud an insurer.
     4  The motor vehicle accident indemnification corporation may not subrogate
     5  its claim against the rescinding or cancelling insurer.
     6    §  2.  Paragraph  2 of subsection (d) of section 3420 of the insurance
     7  law, as amended by chapter 388 of the laws of 2008, is amended  to  read
     8  as follows:
     9    (2)  If under a liability policy issued or delivered in this state, an
    10  insurer shall disclaim liability or deny coverage including a disclaimer
    11  or denial because the insurer rescinded or cancelled  coverage  pursuant
    12  to  section  three thousand four hundred fifty-five of this article, for
    13  death or bodily injury arising out of a motor vehicle accident,  includ-

    14  ing any claim for personal injuries under an uninsured motorist endorse-
    15  ment  by  any occupant of a motor vehicle or other person involved in an
    16  accident that was staged to defraud an insurer who is without  knowledge
    17  of  the  staging or fraudulent intent of the accident, or any other type
    18  of accident occurring within this state, it shall give written notice as
    19  soon as is reasonably possible of such disclaimer of liability or denial
    20  of coverage to the insured and the injured person or any other claimant.
    21    § 3. Paragraph 1 of subsection (f) of section 3420  of  the  insurance
    22  law,  as  amended by chapter 305 of the laws of 1995, is amended to read
    23  as follows:
    24    (1) No policy insuring against loss resulting from  liability  imposed
    25  by law for bodily injury or death suffered by any natural person arising

    26  out  of  the  ownership,  maintenance  and use of a motor vehicle by the
    27  insured shall be issued or delivered by any authorized insurer upon  any
    28  motor vehicle then principally garaged or principally used in this state
    29  unless  it  contains a provision whereby the insurer agrees that it will
    30  pay to the insured, as defined in such provision, subject to  the  terms
    31  and conditions set forth therein to be prescribed by the board of direc-
    32  tors  of  the  Motor  Vehicle  Accident  Indemnification Corporation and
    33  approved by the superintendent, all sums, not exceeding a maximum amount
    34  or limit of twenty-five  thousand  dollars  exclusive  of  interest  and
    35  costs,  on  account  of  injury to and all sums, not exceeding a maximum
    36  amount or limit of fifty thousand  dollars  exclusive  of  interest  and
    37  costs,  on  account of death of one person, in any one accident, and the

    38  maximum amount or limit, subject to such limit for  any  one  person  so
    39  injured  of  fifty thousand dollars or so killed of one hundred thousand
    40  dollars, exclusive of interest and costs, on account of  injury  to,  or
    41  death of, more than one person in any one accident, which the insured or
    42  his legal representative shall be entitled to recover as damages from an
    43  owner  or  operator  of  an  uninsured motor vehicle, unidentified motor
    44  vehicle which leaves the scene of an accident, a  motor  vehicle  regis-
    45  tered  in  this  state as to which at the time of the accident there was
    46  not in effect a policy of liability insurance, a motor vehicle for which
    47  the policy of insurance has been  rescinded  or  cancelled  pursuant  to
    48  section three thousand four hundred fifty-five of this article, a stolen

    49  vehicle,  a  motor  vehicle  involved in an accident which was staged to
    50  defraud an insurer, except such vehicle owned and operated by the perpe-
    51  trator or perpetrators of such accident, a motor vehicle operated  with-
    52  out  permission of the owner, an insured motor vehicle where the insurer
    53  disclaims liability  or  denies  coverage  or  an  unregistered  vehicle
    54  because of bodily injury, sickness or disease, including death resulting
    55  therefrom,  sustained  by  the  insured, caused by accident occurring in
    56  this state and arising out of the ownership, maintenance or use of  such

        S. 1959--A                          3
 
     1  motor vehicle. No payment for non-economic loss shall be made under such
     2  policy  provision  to a covered person unless such person has incurred a

     3  serious injury, as such terms are defined in section five  thousand  one
     4  hundred two of this chapter. Such policy shall not duplicate any element
     5  of  basic  economic  loss  provided  for under article fifty-one of this
     6  chapter. No payments of first party benefits  for  basic  economic  loss
     7  made  pursuant  to  such  article  shall diminish the obligations of the
     8  insurer under this policy provision for the payment of non-economic loss
     9  and economic loss in excess of basic economic loss. Notwithstanding  any
    10  inconsistent  provisions  of section three thousand four hundred twenty-
    11  five of this article, any such policy which does not contain the  afore-
    12  said  provisions  shall be construed as if such provisions were embodied
    13  therein.
    14    § 4. Subparagraph (A) of paragraph 2 of subsection (f) of section 3420
    15  of the insurance law, as separately amended by chapters 547 and  568  of

    16  the laws of 1997, is amended to read as follows:
    17    (A)  Any such policy shall, at the option of the insured, also provide
    18  supplementary  uninsured/underinsured  motorists  insurance  for  bodily
    19  injury,  in an amount up to the bodily injury liability insurance limits
    20  of coverage provided under such policy, subject  to  a  maximum  of  two
    21  hundred  fifty  thousand dollars because of bodily injury to or death of
    22  one person in any one accident  and,  subject  to  such  limit  for  one
    23  person,  up to five hundred thousand dollars because of bodily injury to
    24  or death of two or more persons in  any  one  accident,  or  a  combined
    25  single  limit  policy of five hundred thousand dollars because of bodily
    26  injury to or death of one or more persons in any one accident.  Provided
    27  however,  an  insurer  issuing  such  policy, in lieu of offering to the

    28  insured  the  coverages  stated   above,   may   provide   supplementary
    29  uninsured/underinsured  motorists  insurance  for  bodily  injury, in an
    30  amount up to the bodily injury liability insurance  limits  of  coverage
    31  provided under such policy, subject to a maximum of one hundred thousand
    32  dollars  because  of  bodily injury to or death of one person in any one
    33  accident and, subject to such limit for one person, up to three  hundred
    34  thousand  dollars  because  of  bodily injury to or death of two or more
    35  persons in any one accident, or a combined single limit policy of  three
    36  hundred  thousand dollars because of bodily injury to or death of one or
    37  more persons in any one accident, if such insurer also makes available a
    38  personal umbrella policy with liability coverage limits up to  at  least
    39  five  hundred  thousand dollars which also provides coverage for supple-

    40  mentary   uninsured/underinsured   motorists    claims.    Supplementary
    41  uninsured/underinsured  motorists  insurance  shall provide coverage, in
    42  any state or Canadian province, if the limits  of  liability  under  all
    43  bodily  injury  liability  bonds and insurance policies of another motor
    44  vehicle liable for damages including, but not limited to a  vehicle  for
    45  which  the  policy of insurance has been rescinded or cancelled pursuant
    46  to section three thousand four hundred fifty-five  of  this  article,  a
    47  motor  vehicle  involved  in  an accident which was staged to defraud an
    48  insurer, except such vehicle owned and operated by  the  perpetrator  or
    49  perpetrators  of  such  accident, are in a lesser amount than the bodily
    50  injury liability insurance limits of coverage provided by  such  policy.

    51  Upon   written   request   by   any   insured  covered  by  supplemental
    52  uninsured/underinsured motorists insurance or his duly authorized repre-
    53  sentative and upon disclosure by the insured  of  the  insured's  bodily
    54  injury   and  supplemental  uninsured/underinsured  motorists  insurance
    55  coverage limits, the insurer of any other owner or operator  of  another
    56  motor  vehicle  against  which  a claim has been made for damages to the

        S. 1959--A                          4
 
     1  insured shall disclose, within forty-five days of the request, the bodi-
     2  ly injury liability insurance limits of its coverage provided under  the
     3  policy  or all bodily injury liability bonds. The time of the insured to
     4  make  any  supplementary uninsured/underinsured motorist claim, shall be
     5  tolled during the period the insurer of any other owner or  operator  of

     6  another  motor  vehicle  that  may be liable for damages to the insured,
     7  fails to so disclose its coverage. As a condition precedent to the obli-
     8  gation   of   the   insurer   to    pay    under    the    supplementary
     9  uninsured/underinsured  motorists  insurance  coverage,  the  limits  of
    10  liability of all bodily injury liability  bonds  or  insurance  policies
    11  applicable  at the time of the accident shall be exhausted by payment of
    12  judgments or settlements.
    13    § 5. Paragraph 1 of subsection (b) of section 5103  of  the  insurance
    14  law is amended to read as follows:
    15    (1)  Intentionally  causes  his  own  injury, except any occupant of a
    16  motor vehicle or other person involved in an accident staged to  defraud
    17  an  insurer who is without knowledge of the staging or fraudulent intent
    18  of such accident.

    19    § 6. Paragraph 2 of subsection (a) of section 5103  of  the  insurance
    20  law is amended to read as follows:
    21    (2)  The  named insured and members of his household, other than occu-
    22  pants of a motorcycle, for loss arising out of the use or  operation  of
    23  (i)  an uninsured motor vehicle or motorcycle, or a vehicle whose cover-
    24  age is rescinded or cancelled pursuant to section  three  thousand  four
    25  hundred fifty-five of this chapter, within the United States, its terri-
    26  tories  or  possessions, or Canada; and (ii) an insured motor vehicle or
    27  motorcycle outside of this state  and  within  the  United  States,  its
    28  territories or possessions, or Canada.
    29    §  7. Paragraph (a) of subdivision 1 of section 313 of the vehicle and
    30  traffic law, as amended by chapter 569 of the laws of 1981,  is  amended
    31  to read as follows:

    32    (a) [No] Except as provided for in section three thousand four hundred
    33  fifty-five  of  the  insurance law, no contract of insurance for which a
    34  certificate of insurance has been filed with the commissioner  shall  be
    35  terminated  by  cancellation  by  the insurer until at least twenty days
    36  after mailing to the named insured at the address shown on the policy  a
    37  notice  of  termination  by regular mail, with a certificate of mailing,
    38  properly endorsed by the postal service to be obtained, except where the
    39  cancellation is for non-payment of premium in which  case  fifteen  days
    40  notice  of  cancellation  by  the insurer shall be sufficient, provided,
    41  however, if another insurance contract has  been  procured,  such  other
    42  insurance  contract  shall, as of its effective date and hour, terminate

    43  the insurance previously in effect with respect to  any  motor  vehicles
    44  designated  in  both  contracts.  No  contract  of insurance for which a
    45  certificate of insurance has been filed with the commissioner in which a
    46  natural person is the named  insured  and  the  motor  vehicle  is  used
    47  predominantly  for  non-business  purposes  shall  be  non-renewed by an
    48  insurer unless at least forty-five, but not  more  than  sixty  days  in
    49  advance  of  the renewal date the insurer mails or delivers to the named
    50  insured at the address shown on the  policy  a  written  notice  of  its
    51  intention not to renew. No such contract of insurance in which the named
    52  insured  is  not  a natural person or the motor vehicle is used predomi-
    53  nantly for business purposes shall be non-renewed by an  insurer  unless
    54  at least twenty days in advance of the renewal date the insurer mails or

    55  delivers to the named insured at the address shown on the policy a writ-
    56  ten  notice  of  its  intention not to renew. All notices of non-renewal

        S. 1959--A                          5
 
     1  shall be sent by regular mail with a certificate  of  mailing,  properly
     2  endorsed  by  the  postal  service to be obtained. Time of the effective
     3  date and hour of termination stated in the notice shall become  the  end
     4  of the policy period. Every notice or acknowledgement of termination for
     5  any  cause whatsoever sent to the insured shall include in type of which
     6  the face shall not be smaller than twelve point a statement  that  proof
     7  of financial security is required to be maintained continuously through-
     8  out  the registration period and a notice prescribed by the commissioner
     9  indicating the punitive effects of failure to maintain continuous  proof

    10  of  financial  security and actions which may be taken by the insured to
    11  avoid such punitive effects.
    12    § 8. Paragraphs 6 and 7 of subsection  (b)  of  section  5201  of  the
    13  insurance  law  are  amended  and  a new paragraph 8 is added to read as
    14  follows:
    15    (6) insured motor vehicles where the insurer  disclaims  liability  or
    16  denies coverage, [and]
    17    (7) unregistered motor vehicles[.], and
    18    (8) an accident staged to defraud an insurer.
    19    §  9.  This  act  shall  take effect two hundred seventy days after it
    20  shall have become a law.
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