Bill Text: NY S00643 | 2019-2020 | General Assembly | Introduced


Bill Title: Permits an insurer to rescind or retroactively cancel a policy in circumstance involving an accident staged to defraud an insurer.

Spectrum: Bipartisan Bill

Status: (Engrossed - Dead) 2020-01-21 - referred to insurance [S00643 Detail]

Download: New_York-2019-S00643-Introduced.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                           643
                               2019-2020 Regular Sessions
                    IN SENATE
                                       (Prefiled)
                                     January 9, 2019
                                       ___________
        Introduced  by  Sen. BRESLIN -- read twice and ordered printed, and when
          printed to be committed to the Committee on Insurance
        AN ACT to amend the insurance law and the vehicle and  traffic  law,  in
          relation to permitting an insurer to rescind or retroactively cancel a
          policy in certain circumstances
          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  3457
     2  to read as follows:
     3    §  3457.  Cancellation of policy. (a) An insurer may, within the first
     4  sixty days, rescind or retroactively cancel to  the  inception  a  newly
     5  issued   automobile   insurance  policy  subject  to  paragraph  one  of
     6  subsection (a) of section three thousand  four  hundred  twenty-five  of
     7  this  article,  a  newly  issued  commercial automobile insurance policy
     8  subject to section three thousand four hundred twenty-six of this  arti-
     9  cle,  or  a policy issued pursuant to any plan established under article
    10  fifty-three of this chapter, if  the  initial  premium  payment  is  not
    11  honored  by a financial institution due to the nonexistence or the unau-
    12  thorized use of a bank account, or the initial premium payment is denied
    13  by a credit card company due to the unauthorized use of  a  credit  card
    14  account. This section shall not apply to policies required under article
    15  eight of the vehicle and traffic law.
    16    (b)  A person who is injured during this period and who would ordinar-
    17  ily be covered under the insured's  policy  had  it  not  been  canceled
    18  pursuant to subsection (a) of this section, shall be entitled to recover
    19  under  his  or her own policy subject to the terms and conditions of the
    20  contract, or if the injured person is uninsured, they shall be  entitled
    21  to recover under the motor vehicle accident indemnification corporation,
    22  provided  such  person  did  not participate in any fraudulent activity,
    23  including, but not limited to, an accident staged to defraud an insurer.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06427-01-9

        S. 643                              2
     1  The motor vehicle accident indemnification corporation may not subrogate
     2  its claim against the rescinding or cancelling insurer.
     3    §  2.  Paragraph  2 of subsection (d) of section 3420 of the insurance
     4  law, as amended by chapter 388 of the laws of 2008, is amended  to  read
     5  as follows:
     6    (2)  If under a liability policy issued or delivered in this state, an
     7  insurer shall disclaim liability or deny coverage including a disclaimer
     8  or denial because the insurer rescinded or cancelled  coverage  pursuant
     9  to  section three thousand four hundred fifty-seven of this article, for
    10  death or bodily injury arising out of a motor vehicle accident,  includ-
    11  ing any claim for personal injuries under an uninsured motorist endorse-
    12  ment  by  any occupant of a motor vehicle or other person involved in an
    13  accident that was staged to defraud an insurer who is without  knowledge
    14  of  the  staging or fraudulent intent of the accident, or any other type
    15  of accident occurring within this state, it shall give written notice as
    16  soon as is reasonably possible of such disclaimer of liability or denial
    17  of coverage to the insured and the injured person or any other claimant.
    18    § 3. Paragraph 1 of subsection (f) of section 3420  of  the  insurance
    19  law,  as  amended by chapter 305 of the laws of 1995, is amended to read
    20  as follows:
    21    (1) No policy insuring against loss resulting from  liability  imposed
    22  by law for bodily injury or death suffered by any natural person arising
    23  out  of  the  ownership,  maintenance  and use of a motor vehicle by the
    24  insured shall be issued or delivered by any authorized insurer upon  any
    25  motor vehicle then principally garaged or principally used in this state
    26  unless  it  contains a provision whereby the insurer agrees that it will
    27  pay to the insured, as defined in such provision, subject to  the  terms
    28  and conditions set forth therein to be prescribed by the board of direc-
    29  tors  of  the  Motor  Vehicle  Accident  Indemnification Corporation and
    30  approved by the superintendent, all sums, not exceeding a maximum amount
    31  or limit of twenty-five  thousand  dollars  exclusive  of  interest  and
    32  costs,  on  account  of  injury to and all sums, not exceeding a maximum
    33  amount or limit of fifty thousand  dollars  exclusive  of  interest  and
    34  costs,  on  account of death of one person, in any one accident, and the
    35  maximum amount or limit, subject to such limit for  any  one  person  so
    36  injured  of  fifty thousand dollars or so killed of one hundred thousand
    37  dollars, exclusive of interest and costs, on account of  injury  to,  or
    38  death of, more than one person in any one accident, which the insured or
    39  his legal representative shall be entitled to recover as damages from an
    40  owner  or  operator  of  an  uninsured motor vehicle, unidentified motor
    41  vehicle which leaves the scene of an accident, a  motor  vehicle  regis-
    42  tered  in  this  state as to which at the time of the accident there was
    43  not in effect a policy of liability insurance, a motor vehicle for which
    44  the policy of insurance has been  rescinded  or  cancelled  pursuant  to
    45  section  three  thousand  four  hundred  fifty-seven  of this article, a
    46  stolen vehicle, a motor vehicle involved in an accident which was staged
    47  to defraud an insurer, except such vehicle owned  and  operated  by  the
    48  perpetrator  or  perpetrators of such accident, a motor vehicle operated
    49  without permission of the owner, an  insured  motor  vehicle  where  the
    50  insurer  disclaims liability or denies coverage or an unregistered vehi-
    51  cle because of bodily  injury,  sickness  or  disease,  including  death
    52  resulting therefrom, sustained by the insured, caused by accident occur-
    53  ring  in this state and arising out of the ownership, maintenance or use
    54  of such motor vehicle. No payment for non-economic loss  shall  be  made
    55  under  such  policy provision to a covered person unless such person has
    56  incurred a serious injury, as such terms are  defined  in  section  five

        S. 643                              3
     1  thousand  one  hundred two of this chapter. Such policy shall not dupli-
     2  cate any element of basic  economic  loss  provided  for  under  article
     3  fifty-one of this chapter. No payments of first party benefits for basic
     4  economic  loss  made  pursuant  to such article shall diminish the obli-
     5  gations of the insurer under this policy provision for  the  payment  of
     6  non-economic  loss  and  economic loss in excess of basic economic loss.
     7  Notwithstanding any inconsistent provisions of  section  three  thousand
     8  four hundred twenty-five of this article, any such policy which does not
     9  contain   the  aforesaid  provisions  shall  be  construed  as  if  such
    10  provisions were embodied therein.
    11    § 4. Subparagraph (A) of paragraph 2 of subsection (f) of section 3420
    12  of the insurance law, as separately amended by chapters 547 and  568  of
    13  the laws of 1997, is amended to read as follows:
    14    (A)  Any such policy shall, at the option of the insured, also provide
    15  supplementary  uninsured/underinsured  motorists  insurance  for  bodily
    16  injury,  in an amount up to the bodily injury liability insurance limits
    17  of coverage provided under such policy, subject  to  a  maximum  of  two
    18  hundred  fifty  thousand dollars because of bodily injury to or death of
    19  one person in any one accident  and,  subject  to  such  limit  for  one
    20  person,  up to five hundred thousand dollars because of bodily injury to
    21  or death of two or more persons in  any  one  accident,  or  a  combined
    22  single  limit  policy of five hundred thousand dollars because of bodily
    23  injury to or death of one or more persons in any one accident.  Provided
    24  however,  an  insurer  issuing  such  policy, in lieu of offering to the
    25  insured  the  coverages  stated   above,   may   provide   supplementary
    26  uninsured/underinsured  motorists  insurance  for  bodily  injury, in an
    27  amount up to the bodily injury liability insurance  limits  of  coverage
    28  provided under such policy, subject to a maximum of one hundred thousand
    29  dollars  because  of  bodily injury to or death of one person in any one
    30  accident and, subject to such limit for one person, up to three  hundred
    31  thousand  dollars  because  of  bodily injury to or death of two or more
    32  persons in any one accident, or a combined single limit policy of  three
    33  hundred  thousand dollars because of bodily injury to or death of one or
    34  more persons in any one accident, if such insurer also makes available a
    35  personal umbrella policy with liability coverage limits up to  at  least
    36  five  hundred  thousand dollars which also provides coverage for supple-
    37  mentary   uninsured/underinsured   motorists    claims.    Supplementary
    38  uninsured/underinsured  motorists  insurance  shall provide coverage, in
    39  any state or Canadian province, if the limits  of  liability  under  all
    40  bodily  injury  liability  bonds and insurance policies of another motor
    41  vehicle liable for damages including, but not limited to a  vehicle  for
    42  which  the  policy of insurance has been rescinded or cancelled pursuant
    43  to section three thousand four hundred fifty-seven of  this  article,  a
    44  motor  vehicle  involved  in  an accident which was staged to defraud an
    45  insurer, except such vehicle owned and operated by  the  perpetrator  or
    46  perpetrators  of  such  accident, are in a lesser amount than the bodily
    47  injury liability insurance limits of coverage provided by  such  policy.
    48  Upon   written   request   by   any   insured  covered  by  supplemental
    49  uninsured/underinsured motorists insurance or his duly authorized repre-
    50  sentative and upon disclosure by the insured  of  the  insured's  bodily
    51  injury   and  supplemental  uninsured/underinsured  motorists  insurance
    52  coverage limits, the insurer of any other owner or operator  of  another
    53  motor  vehicle  against  which  a claim has been made for damages to the
    54  insured shall disclose, within forty-five days of the request, the bodi-
    55  ly injury liability insurance limits of its coverage provided under  the
    56  policy  or all bodily injury liability bonds. The time of the insured to

        S. 643                              4
     1  make any supplementary uninsured/underinsured motorist claim,  shall  be
     2  tolled  during  the period the insurer of any other owner or operator of
     3  another motor vehicle that may be liable for  damages  to  the  insured,
     4  fails to so disclose its coverage. As a condition precedent to the obli-
     5  gation    of    the    insurer    to   pay   under   the   supplementary
     6  uninsured/underinsured  motorists  insurance  coverage,  the  limits  of
     7  liability  of  all  bodily  injury liability bonds or insurance policies
     8  applicable at the time of the accident shall be exhausted by payment  of
     9  judgments or settlements.
    10    §  5.  Paragraph  1 of subsection (b) of section 5103 of the insurance
    11  law is amended to read as follows:
    12    (1) Intentionally causes his own injury,  except  any  occupant  of  a
    13  motor  vehicle or other person involved in an accident staged to defraud
    14  an insurer who is without knowledge of the staging or fraudulent  intent
    15  of such accident.
    16    §  6.  Paragraph  2 of subsection (a) of section 5103 of the insurance
    17  law is amended to read as follows:
    18    (2) The named insured and members of his household, other  than  occu-
    19  pants  of  a motorcycle, for loss arising out of the use or operation of
    20  (i) an uninsured motor vehicle or motorcycle, or a vehicle whose  cover-
    21  age  is  rescinded  or cancelled pursuant to section three thousand four
    22  hundred fifty-seven of this  chapter,  within  the  United  States,  its
    23  territories or possessions, or Canada; and (ii) an insured motor vehicle
    24  or  motorcycle  outside  of this state and within the United States, its
    25  territories or possessions, or Canada.
    26    § 7. Paragraph (a) of subdivision 1 of section 313 of the vehicle  and
    27  traffic  law,  as amended by chapter 569 of the laws of 1981, is amended
    28  to read as follows:
    29    (a) [No] Except as provided for in section three thousand four hundred
    30  fifty-seven of the insurance law, no contract of insurance for  which  a
    31  certificate  of  insurance has been filed with the commissioner shall be
    32  terminated by cancellation by the insurer until  at  least  twenty  days
    33  after  mailing to the named insured at the address shown on the policy a
    34  notice of termination by regular mail, with a  certificate  of  mailing,
    35  properly endorsed by the postal service to be obtained, except where the
    36  cancellation  is  for  non-payment of premium in which case fifteen days
    37  notice of cancellation by the insurer  shall  be  sufficient,  provided,
    38  however,  if  another  insurance  contract has been procured, such other
    39  insurance contract shall, as of its effective date and  hour,  terminate
    40  the  insurance  previously  in effect with respect to any motor vehicles
    41  designated in both contracts. No  contract  of  insurance  for  which  a
    42  certificate of insurance has been filed with the commissioner in which a
    43  natural  person  is  the  named  insured  and  the motor vehicle is used
    44  predominantly for non-business  purposes  shall  be  non-renewed  by  an
    45  insurer  unless  at  least  forty-five,  but not more than sixty days in
    46  advance of the renewal date the insurer mails or delivers to  the  named
    47  insured  at  the  address  shown  on  the policy a written notice of its
    48  intention not to renew. No such contract of insurance in which the named
    49  insured is not a natural person or the motor vehicle  is  used  predomi-
    50  nantly  for  business purposes shall be non-renewed by an insurer unless
    51  at least twenty days in advance of the renewal date the insurer mails or
    52  delivers to the named insured at the address shown on the policy a writ-
    53  ten notice of its intention not to renew.  All  notices  of  non-renewal
    54  shall  be  sent  by regular mail with a certificate of mailing, properly
    55  endorsed by the postal service to be obtained.  Time  of  the  effective
    56  date  and  hour of termination stated in the notice shall become the end

        S. 643                              5
     1  of the policy period. Every notice or acknowledgement of termination for
     2  any cause whatsoever sent to the insured shall include in type of  which
     3  the  face  shall not be smaller than twelve point a statement that proof
     4  of financial security is required to be maintained continuously through-
     5  out  the registration period and a notice prescribed by the commissioner
     6  indicating the punitive effects of failure to maintain continuous  proof
     7  of  financial  security and actions which may be taken by the insured to
     8  avoid such punitive effects.
     9    § 8. Paragraphs 6 and 7 of subsection  (b)  of  section  5201  of  the
    10  insurance  law  are  amended  and  a new paragraph 8 is added to read as
    11  follows:
    12    (6) insured motor vehicles where the insurer  disclaims  liability  or
    13  denies coverage, [and]
    14    (7) unregistered motor vehicles[.], and
    15    (8) an accident staged to defraud an insurer.
    16    §  9.  This  act  shall  take effect on the two hundred seventieth day
    17  after it shall have become a law.
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