Bill Text: NY S04420 | 2017-2018 | General Assembly | Amended
Bill Title: Permits an insurer to rescind or retroactively cancel a policy in circumstance involving an accident staged to defraud an insurer.
Spectrum: Partisan Bill (Republican 5-0)
Status: (Engrossed - Dead) 2018-04-17 - referred to insurance [S04420 Detail]
Download: New_York-2017-S04420-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 4420--A 2017-2018 Regular Sessions IN SENATE February 14, 2017 ___________ Introduced by Sens. GOLDEN, AKSHAR, FUNKE -- read twice and ordered printed, and when printed to be committed to the Committee on Insur- ance -- recommitted to the Committee on Insurance in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee 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, EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD06803-02-8S. 4420--A 2 1 provided such person did not participate in any fraudulent activity, 2 including, but not limited to, an accident staged to defraud an insurer. 3 The motor vehicle accident indemnification corporation may not subrogate 4 its claim against the rescinding or cancelling insurer. 5 § 2. Paragraph 2 of subsection (d) of section 3420 of the insurance 6 law, as amended by chapter 388 of the laws of 2008, is amended to read 7 as follows: 8 (2) If under a liability policy issued or delivered in this state, an 9 insurer shall disclaim liability or deny coverage including a disclaimer 10 or denial because the insurer rescinded or cancelled coverage pursuant 11 to section three thousand four hundred fifty-seven of this article, for 12 death or bodily injury arising out of a motor vehicle accident, includ- 13 ing any claim for personal injuries under an uninsured motorist endorse- 14 ment by any occupant of a motor vehicle or other person involved in an 15 accident that was staged to defraud an insurer who is without knowledge 16 of the staging or fraudulent intent of the accident, or any other type 17 of accident occurring within this state, it shall give written notice as 18 soon as is reasonably possible of such disclaimer of liability or denial 19 of coverage to the insured and the injured person or any other claimant. 20 § 3. Paragraph 1 of subsection (f) of section 3420 of the insurance 21 law, as amended by chapter 305 of the laws of 1995, is amended to read 22 as follows: 23 (1) No policy insuring against loss resulting from liability imposed 24 by law for bodily injury or death suffered by any natural person arising 25 out of the ownership, maintenance and use of a motor vehicle by the 26 insured shall be issued or delivered by any authorized insurer upon any 27 motor vehicle then principally garaged or principally used in this state 28 unless it contains a provision whereby the insurer agrees that it will 29 pay to the insured, as defined in such provision, subject to the terms 30 and conditions set forth therein to be prescribed by the board of direc- 31 tors of the Motor Vehicle Accident Indemnification Corporation and 32 approved by the superintendent, all sums, not exceeding a maximum amount 33 or limit of twenty-five thousand dollars exclusive of interest and 34 costs, on account of injury to and all sums, not exceeding a maximum 35 amount or limit of fifty thousand dollars exclusive of interest and 36 costs, on account of death of one person, in any one accident, and the 37 maximum amount or limit, subject to such limit for any one person so 38 injured of fifty thousand dollars or so killed of one hundred thousand 39 dollars, exclusive of interest and costs, on account of injury to, or 40 death of, more than one person in any one accident, which the insured or 41 his legal representative shall be entitled to recover as damages from an 42 owner or operator of an uninsured motor vehicle, unidentified motor 43 vehicle which leaves the scene of an accident, a motor vehicle regis- 44 tered in this state as to which at the time of the accident there was 45 not in effect a policy of liability insurance, a motor vehicle for which 46 the policy of insurance has been rescinded or cancelled pursuant to 47 section three thousand four hundred fifty-seven of this article, a 48 stolen vehicle, a motor vehicle involved in an accident which was staged 49 to defraud an insurer, except such vehicle owned and operated by the 50 perpetrator or perpetrators of such accident, a motor vehicle operated 51 without permission of the owner, an insured motor vehicle where the 52 insurer disclaims liability or denies coverage or an unregistered vehi- 53 cle because of bodily injury, sickness or disease, including death 54 resulting therefrom, sustained by the insured, caused by accident occur- 55 ring in this state and arising out of the ownership, maintenance or use 56 of such motor vehicle. No payment for non-economic loss shall be madeS. 4420--A 3 1 under such policy provision to a covered person unless such person has 2 incurred a serious injury, as such terms are defined in section five 3 thousand one hundred two of this chapter. Such policy shall not dupli- 4 cate any element of basic economic loss provided for under article 5 fifty-one of this chapter. No payments of first party benefits for basic 6 economic loss made pursuant to such article shall diminish the obli- 7 gations of the insurer under this policy provision for the payment of 8 non-economic loss and economic loss in excess of basic economic loss. 9 Notwithstanding any inconsistent provisions of section three thousand 10 four hundred twenty-five of this article, any such policy which does not 11 contain the aforesaid provisions shall be construed as if such 12 provisions were embodied therein. 13 § 4. Subparagraph (A) of paragraph 2 of subsection (f) of section 3420 14 of the insurance law, as separately amended by chapters 547 and 568 of 15 the laws of 1997, is amended to read as follows: 16 (A) Any such policy shall, at the option of the insured, also provide 17 supplementary uninsured/underinsured motorists insurance for bodily 18 injury, in an amount up to the bodily injury liability insurance limits 19 of coverage provided under such policy, subject to a maximum of two 20 hundred fifty thousand dollars because of bodily injury to or death of 21 one person in any one accident and, subject to such limit for one 22 person, up to five hundred thousand dollars because of bodily injury to 23 or death of two or more persons in any one accident, or a combined 24 single limit policy of five hundred thousand dollars because of bodily 25 injury to or death of one or more persons in any one accident. Provided 26 however, an insurer issuing such policy, in lieu of offering to the 27 insured the coverages stated above, may provide supplementary 28 uninsured/underinsured motorists insurance for bodily injury, in an 29 amount up to the bodily injury liability insurance limits of coverage 30 provided under such policy, subject to a maximum of one hundred thousand 31 dollars because of bodily injury to or death of one person in any one 32 accident and, subject to such limit for one person, up to three hundred 33 thousand dollars because of bodily injury to or death of two or more 34 persons in any one accident, or a combined single limit policy of three 35 hundred thousand dollars because of bodily injury to or death of one or 36 more persons in any one accident, if such insurer also makes available a 37 personal umbrella policy with liability coverage limits up to at least 38 five hundred thousand dollars which also provides coverage for supple- 39 mentary uninsured/underinsured motorists claims. Supplementary 40 uninsured/underinsured motorists insurance shall provide coverage, in 41 any state or Canadian province, if the limits of liability under all 42 bodily injury liability bonds and insurance policies of another motor 43 vehicle liable for damages including, but not limited to a vehicle for 44 which the policy of insurance has been rescinded or cancelled pursuant 45 to section three thousand four hundred fifty-seven of this article, a 46 motor vehicle involved in an accident which was staged to defraud an 47 insurer, except such vehicle owned and operated by the perpetrator or 48 perpetrators of such accident, are in a lesser amount than the bodily 49 injury liability insurance limits of coverage provided by such policy. 50 Upon written request by any insured covered by supplemental 51 uninsured/underinsured motorists insurance or his duly authorized repre- 52 sentative and upon disclosure by the insured of the insured's bodily 53 injury and supplemental uninsured/underinsured motorists insurance 54 coverage limits, the insurer of any other owner or operator of another 55 motor vehicle against which a claim has been made for damages to the 56 insured shall disclose, within forty-five days of the request, the bodi-S. 4420--A 4 1 ly injury liability insurance limits of its coverage provided under the 2 policy or all bodily injury liability bonds. The time of the insured to 3 make any supplementary uninsured/underinsured motorist claim, shall be 4 tolled during the period the insurer of any other owner or operator of 5 another motor vehicle that may be liable for damages to the insured, 6 fails to so disclose its coverage. As a condition precedent to the obli- 7 gation of the insurer to pay under the supplementary 8 uninsured/underinsured motorists insurance coverage, the limits of 9 liability of all bodily injury liability bonds or insurance policies 10 applicable at the time of the accident shall be exhausted by payment of 11 judgments or settlements. 12 § 5. Paragraph 1 of subsection (b) of section 5103 of the insurance 13 law is amended to read as follows: 14 (1) Intentionally causes his own injury, except any occupant of a 15 motor vehicle or other person involved in an accident staged to defraud 16 an insurer who is without knowledge of the staging or fraudulent intent 17 of such accident. 18 § 6. Paragraph 2 of subsection (a) of section 5103 of the insurance 19 law is amended to read as follows: 20 (2) The named insured and members of his household, other than occu- 21 pants of a motorcycle, for loss arising out of the use or operation of 22 (i) an uninsured motor vehicle or motorcycle, or a vehicle whose cover- 23 age is rescinded or cancelled pursuant to section three thousand four 24 hundred fifty-seven of this chapter, within the United States, its 25 territories or possessions, or Canada; and (ii) an insured motor vehicle 26 or motorcycle outside of this state and within the United States, its 27 territories or possessions, or Canada. 28 § 7. Paragraph (a) of subdivision 1 of section 313 of the vehicle and 29 traffic law, as amended by chapter 569 of the laws of 1981, is amended 30 to read as follows: 31 (a) [No] Except as provided for in section three thousand four hundred 32 fifty-seven of the insurance law, no contract of insurance for which a 33 certificate of insurance has been filed with the commissioner shall be 34 terminated by cancellation by the insurer until at least twenty days 35 after mailing to the named insured at the address shown on the policy a 36 notice of termination by regular mail, with a certificate of mailing, 37 properly endorsed by the postal service to be obtained, except where the 38 cancellation is for non-payment of premium in which case fifteen days 39 notice of cancellation by the insurer shall be sufficient, provided, 40 however, if another insurance contract has been procured, such other 41 insurance contract shall, as of its effective date and hour, terminate 42 the insurance previously in effect with respect to any motor vehicles 43 designated in both contracts. No contract of insurance for which a 44 certificate of insurance has been filed with the commissioner in which a 45 natural person is the named insured and the motor vehicle is used 46 predominantly for non-business purposes shall be non-renewed by an 47 insurer unless at least forty-five, but not more than sixty days in 48 advance of the renewal date the insurer mails or delivers to the named 49 insured at the address shown on the policy a written notice of its 50 intention not to renew. No such contract of insurance in which the named 51 insured is not a natural person or the motor vehicle is used predomi- 52 nantly for business purposes shall be non-renewed by an insurer unless 53 at least twenty days in advance of the renewal date the insurer mails or 54 delivers to the named insured at the address shown on the policy a writ- 55 ten notice of its intention not to renew. All notices of non-renewal 56 shall be sent by regular mail with a certificate of mailing, properlyS. 4420--A 5 1 endorsed by the postal service to be obtained. Time of the effective 2 date and hour of termination stated in the notice shall become the end 3 of the policy period. Every notice or acknowledgement of termination for 4 any cause whatsoever sent to the insured shall include in type of which 5 the face shall not be smaller than twelve point a statement that proof 6 of financial security is required to be maintained continuously through- 7 out the registration period and a notice prescribed by the commissioner 8 indicating the punitive effects of failure to maintain continuous proof 9 of financial security and actions which may be taken by the insured to 10 avoid such punitive effects. 11 § 8. Paragraphs 6 and 7 of subsection (b) of section 5201 of the 12 insurance law are amended and a new paragraph 8 is added to read as 13 follows: 14 (6) insured motor vehicles where the insurer disclaims liability or 15 denies coverage, [and] 16 (7) unregistered motor vehicles[.], and 17 (8) an accident staged to defraud an insurer. 18 § 9. This act shall take effect on the two hundred seventieth day 19 after it shall have become a law.
