Bill Text: NY S04420 | 2017-2018 | General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
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-Introduced.html
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-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 4420 2017-2018 Regular Sessions IN SENATE February 14, 2017 ___________ Introduced by Sen. GOLDEN -- 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 3455 2 to read as follows: 3 § 3455. 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. LBD06803-01-7S. 4420 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-five 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-five of this article, a stolen 46 vehicle, a motor vehicle involved in an accident which was staged to 47 defraud an insurer, except such vehicle owned and operated by the perpe- 48 trator or perpetrators of such accident, a motor vehicle operated with- 49 out permission of the owner, an insured motor vehicle where the insurer 50 disclaims liability or denies coverage or an unregistered vehicle 51 because of bodily injury, sickness or disease, including death resulting 52 therefrom, sustained by the insured, caused by accident occurring in 53 this state and arising out of the ownership, maintenance or use of such 54 motor vehicle. No payment for non-economic loss shall be made under such 55 policy provision to a covered person unless such person has incurred a 56 serious injury, as such terms are defined in section five thousand oneS. 4420 3 1 hundred two of this chapter. Such policy shall not duplicate any element 2 of basic economic loss provided for under article fifty-one of this 3 chapter. No payments of first party benefits for basic economic loss 4 made pursuant to such article shall diminish the obligations of the 5 insurer under this policy provision for the payment of non-economic loss 6 and economic loss in excess of basic economic loss. Notwithstanding any 7 inconsistent provisions of section three thousand four hundred twenty- 8 five of this article, any such policy which does not contain the afore- 9 said provisions shall be construed as if such provisions were embodied 10 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-five 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 toS. 4420 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-five of this chapter, within the United States, its terri- 23 tories or possessions, or Canada; and (ii) an insured motor vehicle or 24 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-five 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 endS. 4420 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.
