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A04616 Summary:

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A04616 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          4616
 
                               2015-2016 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 4, 2015
                                       ___________
 
        Introduced  by M. of A. MORELLE -- read once and referred to the Commit-
          tee on Insurance
 
        AN ACT to amend the insurance law, in relation to certificates of insur-
          ance; and to amend chapter 552 of the laws of 2014 amending the insur-
          ance law relating to certificates of insurance,  in  relation  to  the
          effectiveness thereof
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Article 5 of the insurance law, as added by chapter 552  of
     2  the laws of 2014, is amended to read as follows:
     3                                  ARTICLE 5
     4                          CERTIFICATES OF INSURANCE
     5  Section 501. Definitions.
     6          502. Prohibitions.
     7          503. [Applicability.
     8          504.] Enforcement.
     9          [505.] 504. Rules and regulations.
    10    § 501. Definitions. For purposes of this [section] article:
    11    (a)  "Certificate" or "certificate of insurance" means any document or
    12  instrument, or addendum thereto  no  matter  how  titled  or  described,
    13  [which  is]  prepared  or  issued by an insurer or insurance producer as
    14  evidence of [property or casualty] property/casualty insurance coverage.
    15  "Certificate" or "certificate of insurance" shall not include  a  policy
    16  of  insurance  or  an  insurance  binder[, and does not amend, extend or
    17  alter the coverage provided by the policy  of  insurance  to  which  the
    18  certificate makes reference, and is subject to all the terms, exclusions
    19  and  conditions  of  such policy.   A certificate of insurance shall not
    20  confer to any person new or additional rights beyond what the referenced
    21  policy of insurance expressly provides].
    22    (b) "Certificate holder" means any person, other than a  policyholder,
    23  that is identified on the certificate as a certificate holder.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD08808-02-5
        A. 4616                             2
 
     1    (c)  "Insurance producer" has the meaning ascribed to it by subsection
     2  (k) of section two thousand one hundred one of this chapter.
     3    (d)  "Insurer" means any person "doing an insurance business" [as such
     4  phrase is defined in section one thousand one hundred  one]  within  the
     5  meaning of this chapter.
     6    (e)  "Person"  means any individual, partnership, corporation, associ-
     7  ation, or other [legal] entity, but shall not include  any  governmental
     8  entity,  [as that term is defined in this section] or any agency, board,
     9  bureau, commission, department, division, institution, office, or public
    10  authority of a state, federal or foreign government.
    11    (f) "Governmental entity" means any public entity as defined in  para-
    12  graph  fifty-one  of subsection (a) of section one hundred seven of this
    13  chapter, any state authority as defined in subdivision  one  of  section
    14  two  of  the  public  authorities law, any local authority as defined in
    15  subdivision two of section two of the public authorities  law,  and  any
    16  interstate or international authority as defined in subdivision three of
    17  section  two  of the public authorities law and any individual acting in
    18  his or her capacity as an employee, officer, or elected official of  any
    19  such governmental entity.
    20    (g)  "Policyholder" means a person who has contracted with [a property
    21  or casualty] an insurer for property/casualty insurance coverage.
    22    (h) "Property/casualty insurance" means a kind of  insurance  that  is
    23  either  a  basic  kind of insurance or a non-basic kind of insurance, as
    24  such terms are defined in section four thousand one hundred one of  this
    25  chapter, but shall not include a kind of insurance specified under para-
    26  graph  three or thirty-one of subsection (a) of section one thousand one
    27  hundred thirteen of this chapter.
    28    § 502. Prohibitions. [(a)  No  person  or  governmental  entity  shall
    29  prepare,  issue,  request,  or  require the issuance of a certificate if
    30  such person or governmental entity knows that such certificate does  not
    31  comply with the following provisions:
    32    (1)  The  certificate  is  a  standard  certificate  of insurance form
    33  promulgated and authorized for use by the  Association  for  Cooperative
    34  Operations  Research  and  Development (ACORD) or the Insurance Services
    35  Office (ISO);
    36    (2) The certificate is a form promulgated  by  the  insurance  company
    37  that has underwritten the policy referenced in the certificate of insur-
    38  ance; or
    39    (3)  The  certificate  is  a  form  prepared,  issued, or requested as
    40  evidence of insurance in connection with  a  commercial  lending  trans-
    41  action in which the underlying property serves as the primary collateral
    42  securing the borrower's repayment of the loan, including, but not limit-
    43  ed to a form promulgated by the Mortgage Bankers Association (MBA).
    44    (4)  The  certificate  is  a form promulgated by a governmental entity
    45  that is considered a covered agency under section fifty-one of the exec-
    46  utive law, provided such form has been approved for use  by  the  super-
    47  intendent.
    48    (b)  No person or governmental entity shall alter, modify, request, or
    49  require the alteration of a certificate  of  insurance  form  when  such
    50  person  or governmental entity knows that such alteration, modification,
    51  request or requirement is in violation of this article.
    52    (c) No person or governmental entity shall request or require  that  a
    53  certificate  of  insurance form contain additional terms, conditions, or
    54  language of any kind not found in the  insurance  policy  to  which  the
    55  certificate  makes  reference  or  to an endorsement to such policy when
        A. 4616                             3

     1  such person or governmental entity knows such request or requirement  is
     2  in violation of this article.
     3    (d)  No  person or governmental entity shall request or require either
     4  in addition to or in lieu of a  certificate  of  insurance,  an  opinion
     5  letter, warranty, statement, supplemental certificate or any other docu-
     6  ment  or correspondence that such person or governmental entity knows to
     7  be inconsistent with the prohibitions of  this  section.    However,  an
     8  insurer  or  insurance  producer  may  prepare or issue an addendum to a
     9  certificate that clarifies and explains the coverage provided by a poli-
    10  cy of insurance and otherwise complies with  the  requirements  of  this
    11  section,  provided  such  authority  is  granted  to the producer by the
    12  insurer.
    13    (e) No person or  governmental  entity  shall  request  or  require  a
    14  certificate  of  insurance that such person or governmental entity knows
    15  contains references to a contract other than the  insurance  policy,  or
    16  warrants  that  the  insurance  policies  referenced  in the certificate
    17  comply with the requirements of a particular contract provided however a
    18  certificate may include a contract title or  description  for  the  sole
    19  purpose of identifying the project for which the certificate was issued,
    20  but  such  inclusion  shall  not  be  interpreted as warranting that the
    21  insurance  policies  referenced  in  the  certificate  comply  with  the
    22  requirements of such contract.
    23    (f) No person or governmental entity shall request or require, prepare
    24  or  issue  a  certificate  of insurance that such person or governmental
    25  entity knows:   (i) does not accurately  state  the  terms  of  coverage
    26  provided by the policy or policies of insurance to which the certificate
    27  makes  reference; (ii) purports to alter, amend, extend, or misrepresent
    28  the terms of coverage to which the certificate makes reference; or (iii)
    29  purports to confer to any person new or additional  rights  beyond  what
    30  the referenced policy of insurance expressly provides] In this state:
    31    (a) With respect to a certificate of insurance evidencing that a poli-
    32  cy  provides  personal  injury  liability  insurance  or property damage
    33  liability insurance, as defined in paragraphs thirteen and  fourteen  of
    34  subsection  (a)  of  section  one  thousand one hundred thirteen of this
    35  chapter, no person or governmental entity shall wilfully require,  as  a
    36  condition  of awarding a contract for work, or if a contract has already
    37  been awarded as a condition for work to commence or continue  under  the
    38  contract,  or  if the contract has been performed or partially performed
    39  as a condition for payment to be made under the contract,  the  issuance
    40  of a certificate of insurance unless the certificate is:
    41    (1) a form promulgated by the insurer issuing the policy referenced in
    42  the certificate of insurance; or
    43    (2)  a  standard  certificate  of insurance form issued by an industry
    44  standard-setting organization and approved for use by the superintendent
    45  or any other form approved for use by the superintendent.
    46    (b) No person or governmental entity shall wilfully require the inclu-
    47  sion of terms, conditions or language of any kind, including  warranties
    48  or  guarantees, that the insurance policy provides coverage or otherwise
    49  sets forth terms and conditions in a certificate of  insurance,  if  the
    50  insurance  policy  referenced  by such certificate of insurance does not
    51  expressly include such terms, conditions, or language.  This  subsection
    52  shall  not  prohibit  any  person  or governmental entity from including
    53  minimum insurance requirements, coverage limits, terms, or other  condi-
    54  tions  in the solicitation of bids as part of a competitive process, and
    55  it shall not prohibit any person or governmental entity from requesting,
    56  or an insurer or insurance producer from responding to  such  a  request
        A. 4616                             4
 
     1  with,  clarification  regarding  the terms of the policy, or endorsement
     2  thereto.
     3    (c)  A  certificate of insurance shall not amend, extend, or alter the
     4  coverage provided by the insurance policy to which  the  certificate  of
     5  insurance  makes reference. A certificate of insurance shall further not
     6  confer to any person any rights beyond those expressly provided  by  the
     7  policy of insurance referenced therein.
     8    §  503.  [Applicability. The provisions of this section shall apply to
     9  all certificate holders, policyholders, insurers,  insurance  producers,
    10  or  any  other  person  and  to certificate of insurance forms issued as
    11  evidence of  insurance  coverages  on  property,  operations,  or  risks
    12  located in this state, regardless of where the certificate holder, poli-
    13  cyholder, insurer, or insurance producer is located.
    14    §  504.]  Enforcement.  [(a)  The  superintendent shall have the power
    15  under section four hundred four of the financial services law to examine
    16  and investigate the activities of any  person  that  the  superintendent
    17  reasonably believes has been or is engaged in an act or practice prohib-
    18  ited by this article. The superintendent shall have the power to enforce
    19  the  provisions  of  this  section  and impose any authorized penalty or
    20  remedy as provided under section four hundred  eight  of  the  financial
    21  services law against any person who violates this article.
    22    (b)  The  office  of  the state inspector general shall have the power
    23  pursuant to section fifty-three of the executive law to investigate  any
    24  governmental  entity  that  is considered a covered agency under section
    25  fifty-one of the executive law that has been or is engaged in an act  or
    26  practice  prohibited  by  this  article.  If  a  governmental entity not
    27  considered a covered agency under section fifty-one of the executive law
    28  has been or is engaged in an act or practice prohibited by this article,
    29  that entity's inspector general, other compliance or  internal  investi-
    30  gative unit or other official or entity with proper authority shall have
    31  the power to investigate such entity] If the superintendent finds, after
    32  notice  and  hearing, that any person, other than a governmental entity,
    33  has wilfully violated this article, then the  superintendent  may  order
    34  the  person to pay to the people of this state a penalty in a sum of one
    35  thousand dollars for the first violation and two  thousand  dollars  for
    36  each subsequent violation.
    37    §  [505.]  504.  Rules and regulations.   The superintendent may adopt
    38  rules or regulations as [he or she] the superintendent considers  appro-
    39  priate to carry out the provisions of this article.
    40    §  2. Section 2 of chapter 552 of the laws of 2014 amending the insur-
    41  ance law relating to certificates of insurance is  amended  to  read  as
    42  follows:
    43    §  2. This act shall take effect on the [ninetieth] one hundred eight-
    44  ieth day after it shall have become a law.
    45    § 3. This act shall take effect immediately; provided that section one
    46  of this act shall take effect on the same date as  chapter  552  of  the
    47  laws of 2014, takes effect.