Relates to contractual liability insurance policies; requires the insurer to either discharge the obligations of the provider under the terms of the service contract, or in the event of the provider's nonperformance, cancellation of the service contract.
STATE OF NEW YORK
________________________________________________________________________
979
2025-2026 Regular Sessions
IN ASSEMBLY(Prefiled)
January 8, 2025
___________
Introduced by M. of A. LUNSFORD, WEPRIN -- read once and referred to the
Committee on Insurance
AN ACT to amend the insurance law, in relation to contractual liability
insurance policies
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 1 of subsection (c) of section 7903 of the insur-
2 ance law, as amended by chapter 578 of the laws of 2000, is amended to
3 read as follows:
4 (1) insure the performance of all its obligations under all service
5 contracts pursuant to [a] one or more service contract reimbursement
6 insurance [policy] policies issued by [an insurer] one or more insurers
7 authorized to issue service contract reimbursement insurance in this
8 state or procured by an excess line licensee pursuant to section two
9 thousand one hundred eighteen of this chapter. Each service contract
10 reimbursement insurance policy shall obligate the insurer that issued
11 such policy to either discharge the obligations and liabilities of such
12 provider under the terms of the service contracts issued by such provid-
13 er, including the return of unearned provider fees upon any termination
14 or cancellation of service contracts, in the event of non-performance of
15 any such obligations or liabilities by such provider or indemnify the
16 provider for losses sustained by reason of the performance of such
17 provider's obligations under service contracts issued pursuant to this
18 article. In the event the provider fails to insure its obligations
19 pursuant to this paragraph or in the event that such insurance shall
20 lapse or be terminated, the provider shall comply with either paragraph
21 two or three of this subsection within forty-five days of the insurance
22 lapse or termination;
23 § 2. Subsection (b) of section 7905 of the insurance law, as added by
24 chapter 614 of the laws of 1997, is amended to read as follows:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01514-01-5
A. 979 2
1 (b) Service contracts insured under [a] one or more service contract
2 reimbursement insurance [policy] policies pursuant to [paragarph] para-
3 graph one of subsection (c) of section seven thousand nine hundred three
4 of this article shall contain a statement in substantially the following
5 form: "Obligations of the provider under this service contract are
6 insured under a service contract reimbursement insurance policy. If the
7 provider fails to pay or provide service on a claim within sixty days
8 after proof of loss has been filed, the contract holder is entitled to
9 make a claim directly against the insurer under the service contract
10 reimbursement insurance policy." The service contract shall also state
11 the name and address and a toll-free telephone number of the insurer
12 under [the] each related service contract reimbursement insurance poli-
13 cy.
14 § 3. This act shall take effect immediately.
