Bill Text: NY A01231 | 2023-2024 | General Assembly | Amended

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Bill Title: Relates to contractual liability insurance policies; requires the insurer to either discharge the obligations of the provider under the terms of the service contract, or in the event of the provider's nonperformance, cancellation of the service contract.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed) 2024-06-03 - RETURNED TO ASSEMBLY [A01231 Detail]

Download: New_York-2023-A01231-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                         1231--A

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                    January 13, 2023
                                       ___________

        Introduced by M. of A. LUNSFORD -- read once and referred to the Commit-
          tee  on  Insurance  --  recommitted  to  the Committee on Insurance in
          accordance with Assembly Rule 3, sec. 2 -- committee discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee

        AN ACT to amend the insurance law, in relation to contractual  liability
          insurance policies

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Paragraph 1 of subsection (c) of section 7903 of the insur-
     2  ance law, as amended by chapter 578 of the laws of 2000, is  amended  to
     3  read as follows:
     4    (1)  insure  the  performance of all its obligations under all service
     5  contracts pursuant to [a] one or  more  service  contract  reimbursement
     6  insurance  [policy] policies issued by [an insurer] one or more insurers
     7  authorized to issue service contract  reimbursement  insurance  in  this
     8  state  or  procured  by  an excess line licensee pursuant to section two
     9  thousand one hundred eighteen of this chapter.   Each  service  contract
    10  reimbursement  insurance  policy  shall obligate the insurer that issued
    11  such policy to either discharge the obligations and liabilities of  such
    12  provider under the terms of the service contracts issued by such provid-
    13  er,  including the return of unearned provider fees upon any termination
    14  or cancellation of service contracts, in the event of non-performance of
    15  any such obligations or liabilities by such provider  or  indemnify  the
    16  provider  for  losses  sustained  by  reason  of the performance of such
    17  provider's obligations under service contracts issued pursuant  to  this
    18  article.  In  the  event  the  provider  fails to insure its obligations
    19  pursuant to this paragraph or in the event  that  such  insurance  shall
    20  lapse  or be terminated, the provider shall comply with either paragraph
    21  two or three of this subsection within forty-five days of the  insurance
    22  lapse or termination;

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01943-04-4
        A. 1231--A                          2

     1    §  2. Subsection (b) of section 7905 of the insurance law, as added by
     2  chapter 614 of the laws of 1997, is amended to read as follows:
     3    (b)  Service  contracts insured under [a] one or more service contract
     4  reimbursement insurance [policy] policies pursuant to [paragarph]  para-
     5  graph one of subsection (c) of section seven thousand nine hundred three
     6  of this article shall contain a statement in substantially the following
     7  form:    "Obligations  of  the  provider under this service contract are
     8  insured under a service contract reimbursement insurance policy. If  the
     9  provider  fails  to  pay or provide service on a claim within sixty days
    10  after proof of loss has been filed, the contract holder is  entitled  to
    11  make  a  claim  directly  against the insurer under the service contract
    12  reimbursement insurance policy." The service contract shall  also  state
    13  the  name  and  address  and a toll-free telephone number of the insurer
    14  under [the] each related service contract reimbursement insurance  poli-
    15  cy.
    16    § 3. This act shall take effect immediately.