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A02866 Summary:

BILL NOA02866
 
SAME ASSAME AS S04199
 
SPONSORPheffer Amato
 
COSPNSRJones, Wallace, Benedetto, Zinerman, Cruz, Weprin, Otis, Sillitti
 
MLTSPNSR
 
Amd §3445, Ins L
 
Provides that the superintendent of financial services shall establish standards for hurricane windstorm deductibles, creating uniformity in the operation of such deductibles with respect to the triggering event.
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A02866 Actions:

BILL NOA02866
 
01/27/2023referred to insurance
04/26/2023reported
04/27/2023advanced to third reading cal.160
05/17/2023passed assembly
05/17/2023delivered to senate
05/17/2023REFERRED TO INSURANCE
01/03/2024DIED IN SENATE
01/03/2024RETURNED TO ASSEMBLY
01/03/2024ordered to third reading cal.81
03/18/2024passed assembly
03/18/2024delivered to senate
03/18/2024REFERRED TO INSURANCE
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A02866 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A2866
 
SPONSOR: Pheffer Amato
  TITLE OF BILL: An act to amend the insurance law, in relation to homeowners insurance deductibles triggers   PURPOSE: The purpose of this bill is to help promote better understanding of the applicability and amount of hurricane windstorm deductibles in homeown- ers and dwelling fire policies and to establish reasonable standards for the operation of hurricane windstorm deductibles.   SUMMARY OF PROVISIONS: Section 1. This section makes amendments to section 3455 of the insur- ance law to require the Superintendent of the Department of Financial Services to promulgate, within 180 days of the effective date of this bill, regulations providing standards for hurricane windstorm deduct- ibles which create, to the greatest extent possible, uniformity in the operation of such deductibles with respect to the triggering event. Section 2. This section sets forth the effective date.   EXISTING LAW: Section 3455 of the insurance law requires the superintendent to estab- lish disclosure requirements in regulation with respect to the operation of windstorm deductibles in homeowners and dwelling fire policies. The regulation sets standards for such notice on the declarations page and in a separate notice accompanying all new and renewed policies.   JUSTIFICATION: Legislation is required to ensure that insurance consumers fully under- stand the terms of the catastrophic windstorm deductible in their home- owners and dwelling fire policies. In particular, consumers need to understand the increased exposure they are assuming. Currently, insur- ers are utilizing a wide variety of windstorm deductible programs in their homeowners and swelling fire policies. Windstorm deductibles, which can range from 1% to 7.5%, are usually expressed as a percentage of the homeowners' Coverage A limit (the value of dwelling structure). A 6% deductible on a $500,000 would result in the policy-holder having to pay the first $30,000 of damages sustained to the home during a wind- storm. While windstorm deductibles are expressed as a percentage, most policy- holders are used to relatively low deductibles expressed as a dollar amount (i.e., $250, $500, $1,000). Percentage deductibles are generally found in health insurance programs, where policy holders are required to pay a percentage of a medical claim. Therefore, policy holders can easi- ly misconstrue a 6% windstorm deductible as requiring them to pay only 6% of the damages sustained, rather than up to 6% of the value of their home. Additionally, while the deductible is often described in terms of a percentage of the Coverage A limit, it typically applies not only to the losses to the dwelling structure, but also to additional structures on the premises (Coverage B) and to the contents of the home (Coverage C) Requiring insurers to issue a notice to policyholders which explains in plain language the amount and circumstances in which the deductible applies will help policyholders better understand these various and complicated deductible provisions. Also, consumer confusion regarding the amount and applicability of their percentage deductibles will be further reduced by requiring the deductible to be expressed, on the policy and declarations page, as a dollar amount of each coverage part to which it applies. Another area of confusion for consumers is understanding the event which activates or "triggers" the applicability of their windstorm deductible. Currently, insurers' deductible programs contain a variety of 'trigger- ing' events. Since the triggering event will determine whether a wind- storm deductible applies to a policyholder's loss, it is crucial that it be fair and reasonable to both the policyholder and the insurer. Uniform standards for and notice explaining the operation of catastrophic wind- storm deductibles are necessary to promote easier comparison between different insurers' options, and to ensure clear understanding of the extent of policyholder exposure under these options. The requirements for understandable and fair standards will ensure that catastrophic windstorm deductibles are reasonable, actuarially appropriate and applied in the proper circumstances.   LEGISLATIVE HISTORY: 2020-21: A.950-B Advanced to Third Reading 2019-20: A.2902-A Advanced to Third Reading 2017-18: A.6665-A Passed Assembly 2015-16: A.7537-A Passed Assembly 2013-14: A.2729 Passed Assembly 2011-12: A.3283-A Passed Assembly 2009-10: A.4847-A Passed Assembly 2007-08: A.4860 Passed Assembly   FISCAL IMPLICATIONS: None to the State.   EFFECTIVE DATE: Ninetieth day after it shall have become law, and shall apply to all polices issued or renewed on or after the one hundred eightieth day after the adoption of the required regulations.
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A02866 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          2866
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 27, 2023
                                       ___________
 
        Introduced  by M. of A. PHEFFER AMATO, JONES, WALLACE, BENEDETTO, ZINER-
          MAN, CRUZ -- read once and referred to the Committee on Insurance
 
        AN ACT to amend the insurance law, in relation to  homeowners  insurance
          deductibles triggers
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Section 3445 of the insurance law, as added by  chapter  44
     2  of the laws of 1998, is amended to read as follows:
     3    § 3445. Windstorm insurance notice; deductible trigger standards.  (a)
     4  The superintendent shall by regulation establish disclosure requirements
     5  with  respect to the operation of any deductible in a homeowner's insur-
     6  ance policy or dwelling fire personal lines policy which applies as  the
     7  result  of  a  windstorm. Such regulations shall prescribe the form of a
     8  notice to be provided by an insurer to  an  insured.  The  notice  shall
     9  explain  in  clear  and plain language the amount of the deductible, the
    10  circumstances under which the deductible applies and any  other  matters
    11  which the superintendent, in his or her discretion, shall deem necessary
    12  or appropriate.
    13    (b)  The  superintendent  shall  by regulation establish standards for
    14  hurricane windstorm deductibles, which create, to  the  greatest  extent
    15  possible,  uniformity  in the operation of such deductibles with respect
    16  to the triggering event.
    17    The superintendent shall  promulgate  such  regulations  by  emergency
    18  adoption  or  otherwise, within one hundred eighty days of the effective
    19  date of the chapter of the laws of two thousand twenty-three which added
    20  this subsection. Notwithstanding paragraph seven of  subsection  (a)  of
    21  section  three  thousand  four  hundred twenty-five of this article, any
    22  changes in a homeowner's insurance policy or dwelling, fire, or personal
    23  policy registered as a result of the adoption by the  superintendent  of
    24  regulations  under  this section, may be applied to such policies on the
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06414-01-3

        A. 2866                             2
 
     1  policy's initial renewal date or the policy's next annual renewal  after
     2  the effective date of such regulations.
     3    §  2.  This  act shall take effect on the ninetieth day after it shall
     4  have become a law, and shall apply to all policies issued or renewed  on
     5  or  after  the one hundred eightieth day after the adoption of the regu-
     6  lations required in section 3445 of the insurance  law,  as  amended  by
     7  this act.
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