Provides that when a flood event not covered under a policy or specifically excluded is a contributing factor in or occurs simultaneously as a covered event or peril, the insurer shall not deny or exclude coverage for the loss or damage caused by the covered event or peril.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7455A
SPONSOR: Goldfeder TITLE OF BILL: An act to amend the insurance law, in relation to
anti-concurrent causation clauses
SUMMARY OF SPECIFIC PROVISIONS:
This bill would prohibit an insurance company from denying a claim that
would normally be covered because a flood that is not covered or is
specifically excluded under the policy occurred at the same time or
contributed to the loss. The bill also clarifies that an insurer is not
obligated to pay for any loss caused by the flood that is not covered or
is excluded under the policy.
In addition, this bill would also state that, if an insurer issues a
policy that includes a provision that allows the insurer to determine
whether a loss caused by a covered peril may or may not be covered
because a peril that is excluded or is not covered under the policy was
a cause of the loss, the insurer must clearly state in the policy which
perils not covered or excluded would have to cause the loss and whether
the causation would have to be proximate or remote. This provision would
also have to be disclosed to the policyholder prior to the sale of the
policy.
JUSTIFICATION:
An anti-concurrent causation clause is a provision contained in many
homeowners policies that states that if a loss is caused by two or more
perils, one that is covered by the policy and one that is excluded, then
the loss is excluded, regardless of which peril is the primary cause or
whether the perils occurred concurrently or in a sequence. For example,
if a policy covers wind damage but not flood damage, and both events
happen at about the same time, then the damage to the property will not
be covered. When insurers that use anti-concurrent causation clauses
treat property damage as a single loss triggered by multiple perils the
result is a complete denial of the claim_ In the aftermath of Superstorm
Sandy, many homeowners were surprised when insurance companies denied
their claims for perils that should have been covered under the policy
(such as windstorm damage) because the perils occurred at the same time
as a flood, which is excluded under most homeowners policies. As a
result, these homeowners found themselves without adequate insurance
coverage at a time when they needed it the most. This bill would rectify
this by limiting the circumstances in which insurers can use anti-con-
current causation clauses and requiring clear disclosure of such clauses
prior to the sale of a policy.
PRIOR LEGISLATIVE HISTORY:
New bill
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
EFFECTIVE DATE:
Immediately.
STATE OF NEW YORK
________________________________________________________________________
7455--A
Cal. No. 442
2013-2014 Regular Sessions
IN ASSEMBLY
May 17, 2013
___________
Introduced by M. of A. GOLDFEDER, ABINANTI, TITONE, SKOUFIS, MALLIOTAKIS
-- read once and referred to the Committee on Insurance -- reported
from committee, advanced to a third reading, amended and ordered
reprinted, retaining its place on the order of third reading
AN ACT to amend the insurance law, in relation to anti-concurrent causa-
tion clauses
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. Anti-concurrent causation clauses. (a) When a flood event not
4 covered under a policy or specifically excluded under a policy is a
5 contributing factor in or occurs simultaneously as a covered event or
6 peril, the insurer shall not deny or exclude coverage for the loss or
7 damage caused by the covered event or peril. However, nothing shall
8 obligate the insurer to pay for any loss or damage caused by the flood
9 event that is not covered or is excluded.
10 (b) If an insurer issues a policy that includes a provision that
11 allows the insurer to determine whether loss or damage caused by a
12 covered peril may or may not be covered partially or wholly based upon
13 whether a peril that is excluded or not covered under the policy was the
14 proximate or remote cause of the covered loss or damage, the insurer
15 must clearly state in the policy: (1) which peril excluded or not
16 covered under the policy must cause, proximately or remotely, the
17 covered peril or perils; and (2) in each specific instance, whether the
18 causation must be proximate or remote to result in a limitation in
19 coverage. The insurer must disclose this provision to the policyholder
20 prior to the sale or purchase of the policy.
21 § 2. This act shall take effect immediately and shall apply to all
22 policies issued or renewed after such effective date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11120-02-3
