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

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

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-Introduced.html

---

                STATE OF NEW YORK
        ________________________________________________________________________

                                          1231

                               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

        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]  purchase  one  or  more  service  contract
     6  reimbursement insurance [policy] policies issued by [an insurer] one  or
     7  more  insurers authorized to issue service contract reimbursement insur-
     8  ance in this state or procured by an excess line  licensee  pursuant  to
     9  section  two  thousand  one  hundred  eighteen  of  this chapter.   Each
    10  reimbursement insurance policy shall obligate the  insurer  that  issued
    11  such  policy  to  either  provide  reimbursement to the provider for all
    12  obligations incurred  by  a  provider  under  the  terms  of  a  service
    13  contract,  or  in the event of the provider's nonperformance, provide or
    14  pay on behalf  of  the  provider  all  covered  contractual  obligations
    15  incurred  by the provider. In the event the provider fails to insure its
    16  obligations pursuant to this paragraph or in the event that such  insur-
    17  ance shall lapse or be terminated, the provider shall comply with either
    18  paragraph  two or three of this subsection within forty-five days of the
    19  insurance lapse or termination;
    20    § 2. Subsection (b) of section 7905 of the insurance law, as added  by
    21  chapter 614 of the laws of 1997, is amended to read as follows:
    22    (b)  Service  contracts insured under [a] one or more service contract
    23  reimbursement insurance [policy] policies pursuant to [paragarph]  para-
    24  graph one of subsection (c) of section seven thousand nine hundred three
    25  of this article shall contain a statement in substantially the following

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01943-01-3
        A. 1231                             2

     1  form:    "Obligations  of  the  provider under this service contract are
     2  insured under a service contract reimbursement insurance policy. If  the
     3  provider  fails  to  pay or provide service on a claim within sixty days
     4  after  proof  of loss has been filed, the contract holder is entitled to
     5  make a claim directly against the insurer  under  the  service  contract
     6  reimbursement  insurance  policy." The service contract shall also state
     7  the name and address and a toll-free telephone  number  of  the  insurer
     8  under  [the] each related service contract reimbursement insurance poli-
     9  cy.
    10    § 3. This act shall take effect immediately.