Creates a homeowners' bill of rights; directs the superintendent of financial services to issue a consumers' guide on insuring against catastrophic loss.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4435A
SPONSOR: Silver (MS) TITLE OF BILL:
An act to amend the insurance law, in relation to creating a homeowners'
bill of rights and a consumer guide on insuring against catastrophic
loss caused by natural disasters
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to establish a Homeowners' Bill of Rights
that would educate consumers about the details of their insurance poli-
cies and their rights under the law.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill would amend the Insurance law by adding a new
section 3444-a, the "Homeowners Bill of Rights" This section would obli-
gate certain insurers to provide to insured or potentially insured
parties written disclosures describing: coverage or limitations on
coverage for losses caused by certain catastrophic occurrences, informa-
tion related to claims investigation and processing, the rights of the
insured under the law, that the provisions of the policy could be modi-
fied or changed pursuant to state or federal law following a disaster or
emergency, the insurer's contact information, information on obtaining
the Consumer's Guide on Insuring Against Catastrophic Losses, and any
other information deemed necessary by the Superintendent In addition,
when the insured's policy does not include coverage for certain
catastrophic occurrences, the insurer would be required to provide
information on additional coverage options.
Section 2 of the bill would require insurers, agents, and brokers to
disclose to consumers looking to purchase homeowners and certain commer-
cial policies which flood zone the real property to be covered by the
policy is located in and the level of risk associated with that flood
zone (as determined by the Federal Emergency Management Agency). The
insurer, agent, or broker would also have to provide notification to the
consumer about the availability of additional coverage options for
damage resulting from weather conditions, natural disasters, and other
occurrences, including floods. This notification would be required to
include information on the New York Property Insurance Underwriting
Association, the Coastal Market Assistance Program, the National Flood
Insurance Program, and other coverage options that are available from
the insurer and other parties. The consumer would have to acknowledge
receipt of the disclosure and notification required by this bill through
a signed writing, electronic signature, or other means prescribed or
approved by the Superintendent. This disclosure would also be required
upon the renewal of the policy.
If the flood zone in which the real property is located changes, the
insurer, agent, or broker would be required to provide the insured with
an updated disclosure informing the insured of the new flood zone and
the level of risk associated with that flood zone. The consumer would
have to acknowledge receipt of the disclosure and notification required
by this bill through a signed writing, electronic signature, or other
means prescribed or approved by the Superintendent.
Section 3 of the bill would amend Section 2601 of the insurance law to
include a new paragraph (7). This paragraph would state that the knowing
misrepresentation of or failure to provide pertinent facts of policy
provisions to claimants, and the failure to comply with those policy
provisions, shall constitute an unfair claim settlement practice.
Section 4 of the bill would add a new section 338 to the Insurance law.
This section would instruct the Superintendent to create a Consumers
Guide.on Insuring Against Catastrophic Losses, and outlines the informa-
tion which the Superintendent must include in the Guide. The Guide
would include the ways in which certain occurrences can cause
catastrophic losses, the types of insurance that provide coverage
against catastrophic losses, information on which type of weather,
natural disasters, and other occurrences and catastrophic losses are
typically excluded from insurance policies and how a consumer may obtain
coverage for those exclusions, steps a consumer can take to prepare for
a natural disaster or other catastrophic loss, steps a consumer can take
to facilitate the timely processing of an insurance claim and an expla-
nation of policyholder's rights in law and regulation, and a department
toll-free consumer hotline and website address through which consumers
may initiate complaints and request general information about insurance.
The department would be able to satisfy these requirements through sepa-
rate or supplemental publications and updates, and the Superintendent
would be required to post the "Consumer Guide on Insuring Against
Catastrophic Losses" on the Department's website.
JUSTIFICATION:
Following Superstorm Sandy and Tropical Storms Irene and Lee, many poli-
cyholders were surprised that their insurance company either rejected
their claim or offered them a settlement amount that was significantly
lower than the cost of the damages. Many policyholders thought that
their existing insurance policy provided sufficient coverage for water
damage and other catastrophic losses caused by these storms. Often,
there were long delays in the investigation and settlement of claims,
leaving home and business owners in limbo for weeks, sometimes months.
It became clear to the victims of these storms that insurance policies
can be complex, the claims process can be burdensome for the policyhold-
er, and insurance companies can be unresponsive at a time when assist-
ance is needed the most. Policyholders should be made aware of the
different insurance coverage options available, the benefits of each
option, and their rights under the law.
This bill would address these issues by requiring insurers to provide
insureds and prospective insureds with a notice containing a Homeowners'
Bill of Rights. The notice would inform consumers of the coverage
provided and any exclusions, what flood zone they are located in and
what the level of risk associated with that flood zone is, how they can
obtain additional coverage, their rights under the law, and other infor-
mation that will educate consumers about their insurance coverage. This
will ensure that policyholders have coverage that meets their needs.
PRIOR LEGISLATIVE HISTORY:
A2287A of 2013-14
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
EFFECTIVE DATE:
Immediately.
