Bill Text: NY S01471 | 2015-2016 | 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 1-0)
Status: (Engrossed - Dead) 2016-06-14 - referred to insurance [S01471 Detail]
Download: New_York-2015-S01471-Amended.html
S T A T E O F N E W Y O R K ________________________________________________________________________ 1471--A Cal. No. 120 2015-2016 Regular Sessions I N S E N A T E January 12, 2015 ___________ Introduced by Sen. GOLDEN -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, passed by Senate and delivered to the Assembly, recalled, vote reconsidered, restored to third reading, amended and ordered reprinted, retaining its place in the order of third reading 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 S 3455. CANCELLATION OF POLICY. (A) AN INSURER MAY, WITHIN THE FIRST 4 THIRTY DAYS, RESCIND OR RETROACTIVELY CANCEL TO THE INCEPTION A NEWLY 5 ISSUED AUTOMOBILE INSURANCE POLICY SUBJECT TO SECTIONS THREE THOUSAND 6 FOUR HUNDRED TWENTY-FIVE OR THREE THOUSAND FOUR HUNDRED TWENTY-SIX OF 7 THIS ARTICLE, IF THE INITIAL PREMIUM PAYMENT IS NOT HONORED BY A FINAN- 8 CIAL INSTITUTION DUE TO THE NONEXISTENCE OF A BANK ACCOUNT. FOR THE 9 PURPOSES OF THIS SECTION "NONEXISTENCE OF A BANK ACCOUNT" SHALL MEAN 10 THAT NO ACCOUNT WITH THE NAME AND ACCOUNT NUMBER PROVIDED WAS EVER IN 11 EXISTENCE AND SHALL NOT INCLUDE ACCOUNTS THAT MAY BE CLOSED OR OTHERWISE 12 INACTIVE. IN THE EVENT THAT SUCH INITIAL PAYMENT IS NOT HONORED BY A 13 FINANCIAL INSTITUTION DUE TO THE NONEXISTENCE OF A BANK ACCOUNT, THE 14 INSURER SHALL NOTIFY THE POLICYHOLDER BY CERTIFIED AND FIRST CLASS MAIL 15 THAT UNLESS THE POLICYHOLDER REMITS PAYMENT TO THE INSURER WITHIN TEN 16 BUSINESS DAYS, THE POLICY MAY BE RESCINDED OR CANCELLED RETROACTIVELY TO 17 THE INCEPTION OF THE POLICY. HOWEVER, IF PAYMENT IS REMITTED AFTER THE 18 TENTH BUSINESS DAY AND THE INSURED HAS NOT BEEN NOTIFIED THAT THE POLICY 19 HAS BEEN RESCINDED OR RETROACTIVELY CANCELED, THE RIGHT TO RESCIND OR EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD00569-02-5 S. 1471--A 2 1 RETROACTIVELY CANCEL SUCH POLICY PURSUANT TO THIS SECTION SHALL BE 2 DEEMED TO HAVE BEEN WAIVED AND SUCH POLICY SHALL REMAIN IN EFFECT. THIS 3 SECTION SHALL NOT APPLY TO POLICIES REQUIRED UNDER ARTICLE EIGHT OF THE 4 VEHICLE AND TRAFFIC LAW. 5 (B) A PERSON WHO IS INJURED DURING THIS PERIOD AND WHO WOULD ORDINAR- 6 ILY BE COVERED UNDER THE INSURED'S POLICY HAD IT NOT BEEN CANCELED 7 PURSUANT TO SUBSECTION (A) OF THIS SECTION, SHALL BE ENTITLED TO RECOVER 8 UNDER HIS OR HER OWN POLICY SUBJECT TO THE TERMS AND CONDITIONS OF THE 9 CONTRACT, OR IF THE INJURED PERSON IS UNINSURED, THEY SHALL BE ENTITLED 10 TO RECOVER UNDER THE MOTOR VEHICLE ACCIDENT INDEMNIFICATION CORPORATION, 11 PROVIDED SUCH PERSON DID NOT PARTICIPATE IN ANY FRAUDULENT ACTIVITY, 12 INCLUDING, BUT NOT LIMITED TO, AN ACCIDENT STAGED TO DEFRAUD AN INSURER. 13 THE MOTOR VEHICLE ACCIDENT INDEMNIFICATION CORPORATION MAY NOT SUBROGATE 14 ITS CLAIM AGAINST THE RESCINDING INSURER. 15 S 2. Paragraph 2 of subsection (d) of section 3420 of the insurance 16 law, as amended by chapter 388 of the laws of 2008, is amended to read 17 as follows: 18 (2) If under a liability policy issued or delivered in this state, an 19 insurer shall disclaim liability [or], deny coverage, OR RESCIND COVER- 20 AGE PURSUANT TO SECTION THREE THOUSAND FOUR HUNDRED FIFTY-FIVE OF THIS 21 ARTICLE, for death or bodily injury arising out of a motor vehicle acci- 22 dent, INCLUDING ANY CLAIM FOR PERSONAL INJURIES UNDER AN UNINSURED 23 MOTORIST ENDORSEMENT BY ANY OCCUPANT OF A MOTOR VEHICLE OR OTHER PERSON 24 INVOLVED IN AN ACCIDENT WHICH WAS STAGED TO DEFRAUD AN INSURER WHO IS 25 WITHOUT KNOWLEDGE OF THE STAGING OR FRAUDULENT INTENT OF THE ACCIDENT, 26 or any other type of accident occurring within this state, it shall give 27 written notice as soon as is reasonably possible of such disclaimer of 28 liability or denial of coverage to the insured and the injured person or 29 any other claimant. 30 S 3. Paragraph 1 of subsection (f) of section 3420 of the insurance 31 law, as amended by chapter 305 of the laws of 1995, is amended to read 32 as follows: 33 (1) No policy insuring against loss resulting from liability imposed 34 by law for bodily injury or death suffered by any natural person arising 35 out of the ownership, maintenance and use of a motor vehicle by the 36 insured shall be issued or delivered by any authorized insurer upon any 37 motor vehicle then principally garaged or principally used in this state 38 unless it contains a provision whereby the insurer agrees that it will 39 pay to the insured, as defined in such provision, subject to the terms 40 and conditions set forth therein to be prescribed by the board of direc- 41 tors of the Motor Vehicle Accident Indemnification Corporation and 42 approved by the superintendent, all sums, not exceeding a maximum amount 43 or limit of twenty-five thousand dollars exclusive of interest and 44 costs, on account of injury to and all sums, not exceeding a maximum 45 amount or limit of fifty thousand dollars exclusive of interest and 46 costs, on account of death of one person, in any one accident, and the 47 maximum amount or limit, subject to such limit for any one person so 48 injured of fifty thousand dollars or so killed of one hundred thousand 49 dollars, exclusive of interest and costs, on account of injury to, or 50 death of, more than one person in any one accident, which the insured or 51 his legal representative shall be entitled to recover as damages from an 52 owner or operator of an uninsured motor vehicle, unidentified motor 53 vehicle which leaves the scene of an accident, a motor vehicle regis- 54 tered in this state as to which at the time of the accident there was 55 not in effect a policy of liability insurance, A MOTOR VEHICLE FOR WHICH 56 THE POLICY OF INSURANCE HAS BEEN RESCINDED OR CANCELLED PURSUANT TO S. 1471--A 3 1 SECTION THREE THOUSAND FOUR HUNDRED FIFTY-FIVE OF THIS ARTICLE, a stolen 2 vehicle, A MOTOR VEHICLE INVOLVED IN AN ACCIDENT WHICH WAS STAGED TO 3 DEFRAUD AN INSURER, EXCEPT SUCH VEHICLE OWNED AND OPERATED BY THE PERPE- 4 TRATOR OR PERPETRATORS OF SUCH ACCIDENT, a motor vehicle operated with- 5 out permission of the owner, an insured motor vehicle where the insurer 6 disclaims liability or denies coverage or an unregistered vehicle 7 because of bodily injury, sickness or disease, including death resulting 8 therefrom, sustained by the insured, caused by accident occurring in 9 this state and arising out of the ownership, maintenance or use of such 10 motor vehicle. No payment for non-economic loss shall be made under such 11 policy provision to a covered person unless such person has incurred a 12 serious injury, as such terms are defined in section five thousand one 13 hundred two of this chapter. Such policy shall not duplicate any element 14 of basic economic loss provided for under article fifty-one of this 15 chapter. No payments of first party benefits for basic economic loss 16 made pursuant to such article shall diminish the obligations of the 17 insurer under this policy provision for the payment of non-economic loss 18 and economic loss in excess of basic economic loss. Notwithstanding any 19 inconsistent provisions of section three thousand four hundred twenty- 20 five of this article, any such policy which does not contain the afore- 21 said provisions shall be construed as if such provisions were embodied 22 therein. 23 S 4. Subparagraph (A) of paragraph 2 of subsection (f) of section 3420 24 of the insurance law, as separately amended by chapters 547 and 568 of 25 the laws of 1997, is amended to read as follows: 26 (A) Any such policy shall, at the option of the insured, also provide 27 supplementary uninsured/underinsured motorists insurance for bodily 28 injury, in an amount up to the bodily injury liability insurance limits 29 of coverage provided under such policy, subject to a maximum of two 30 hundred fifty thousand dollars because of bodily injury to or death of 31 one person in any one accident and, subject to such limit for one 32 person, up to five hundred thousand dollars because of bodily injury to 33 or death of two or more persons in any one accident, or a combined 34 single limit policy of five hundred thousand dollars because of bodily 35 injury to or death of one or more persons in any one accident. Provided 36 however, an insurer issuing such policy, in lieu of offering to the 37 insured the coverages stated above, may provide supplementary 38 uninsured/underinsured motorists insurance for bodily injury, in an 39 amount up to the bodily injury liability insurance limits of coverage 40 provided under such policy, subject to a maximum of one hundred thousand 41 dollars because of bodily injury to or death of one person in any one 42 accident and, subject to such limit for one person, up to three hundred 43 thousand dollars because of bodily injury to or death of two or more 44 persons in any one accident, or a combined single limit policy of three 45 hundred thousand dollars because of bodily injury to or death of one or 46 more persons in any one accident, if such insurer also makes available a 47 personal umbrella policy with liability coverage limits up to at least 48 five hundred thousand dollars which also provides coverage for supple- 49 mentary uninsured/underinsured motorists claims. Supplementary 50 uninsured/underinsured motorists insurance shall provide coverage, in 51 any state or Canadian province, if the limits of liability under all 52 bodily injury liability bonds and insurance policies of another motor 53 vehicle liable for damages INCLUDING BUT NOT LIMITED TO A VEHICLE FOR 54 WHICH THE POLICY OF INSURANCE HAS BEEN RESCINDED OR CANCELLED PURSUANT 55 TO SECTION THREE THOUSAND FOUR HUNDRED FIFTY-FIVE OF THIS ARTICLE, A 56 MOTOR VEHICLE INVOLVED IN AN ACCIDENT WHICH WAS STAGED TO DEFRAUD AN S. 1471--A 4 1 INSURER, EXCEPT SUCH VEHICLE OWNED AND OPERATED BY THE PERPETRATOR OR 2 PERPETRATORS OF SUCH ACCIDENT, are in a lesser amount than the bodily 3 injury liability insurance limits of coverage provided by such policy. 4 Upon written request by any insured covered by supplemental 5 uninsured/underinsured motorists insurance or his duly authorized repre- 6 sentative and upon disclosure by the insured of the insured's bodily 7 injury and supplemental uninsured/underinsured motorists insurance 8 coverage limits, the insurer of any other owner or operator of another 9 motor vehicle against which a claim has been made for damages to the 10 insured shall disclose, within forty-five days of the request, the bodi- 11 ly injury liability insurance limits of its coverage provided under the 12 policy or all bodily injury liability bonds. The time of the insured to 13 make any supplementary uninsured/underinsured motorist claim, shall be 14 tolled during the period the insurer of any other owner or operator of 15 another motor vehicle that may be liable for damages to the insured, 16 fails to so disclose its coverage. As a condition precedent to the obli- 17 gation of the insurer to pay under the supplementary 18 uninsured/underinsured motorists insurance coverage, the limits of 19 liability of all bodily injury liability bonds or insurance policies 20 applicable at the time of the accident shall be exhausted by payment of 21 judgments or settlements. 22 S 5. Paragraph 1 of subsection (b) of section 5103 of the insurance 23 law is amended to read as follows: 24 (1) Intentionally causes his own injury, EXCEPT ANY OCCUPANT OF A 25 MOTOR VEHICLE OR OTHER PERSON INVOLVED IN AN ACCIDENT STAGED TO DEFRAUD 26 AN INSURER WHO IS WITHOUT KNOWLEDGE OF THE STAGING OR FRAUDULENT INTENT 27 OF SUCH ACCIDENT. 28 S 6. Paragraph 2 of subsection (a) of section 5103 of the insurance 29 law is amended to read as follows: 30 (2) The named insured and members of his household, other than occu- 31 pants of a motorcycle, for loss arising out of the use or operation of 32 (i) an uninsured motor vehicle or motorcycle, OR A VEHICLE WHOSE COVER- 33 AGE IS RESCINDED OR CANCELLED PURSUANT TO SECTION THREE THOUSAND FOUR 34 HUNDRED FIFTY-FIVE OF THIS CHAPTER, within the United States, its terri- 35 tories or possessions, or Canada; and (ii) an insured motor vehicle or 36 motorcycle outside of this state and within the United States, its 37 territories or possessions, or Canada. 38 S 7. Paragraph (a) of subdivision 1 of section 313 of the vehicle and 39 traffic law, as amended by chapter 569 of the laws of 1981, is amended 40 to read as follows: 41 (a) [No] EXCEPT AS PROVIDED FOR IN SECTION THREE THOUSAND FOUR HUNDRED 42 FIFTY-FIVE OF THE INSURANCE LAW, NO contract of insurance for which a 43 certificate of insurance has been filed with the commissioner shall be 44 terminated by cancellation by the insurer until at least twenty days 45 after mailing to the named insured at the address shown on the policy a 46 notice of termination by regular mail, with a certificate of mailing, 47 properly endorsed by the postal service to be obtained, except where the 48 cancellation is for non-payment of premium in which case fifteen days 49 notice of cancellation by the insurer shall be sufficient, provided, 50 however, if another insurance contract has been procured, such other 51 insurance contract shall, as of its effective date and hour, terminate 52 the insurance previously in effect with respect to any motor vehicles 53 designated in both contracts. No contract of insurance for which a 54 certificate of insurance has been filed with the commissioner in which a 55 natural person is the named insured and the motor vehicle is used 56 predominantly for non-business purposes shall be non-renewed by an S. 1471--A 5 1 insurer unless at least forty-five, but not more than sixty days in 2 advance of the renewal date the insurer mails or delivers to the named 3 insured at the address shown on the policy a written notice of its 4 intention not to renew. No such contract of insurance in which the named 5 insured is not a natural person or the motor vehicle is used predomi- 6 nantly for business purposes shall be non-renewed by an insurer unless 7 at least twenty days in advance of the renewal date the insurer mails or 8 delivers to the named insured at the address shown on the policy a writ- 9 ten notice of its intention not to renew. All notices of non-renewal 10 shall be sent by regular mail with a certificate of mailing, properly 11 endorsed by the postal service to be obtained. Time of the effective 12 date and hour of termination stated in the notice shall become the end 13 of the policy period. Every notice or acknowledgement of termination for 14 any cause whatsoever sent to the insured shall include in type of which 15 the face shall not be smaller than twelve point a statement that proof 16 of financial security is required to be maintained continuously through- 17 out the registration period and a notice prescribed by the commissioner 18 indicating the punitive effects of failure to maintain continuous proof 19 of financial security and actions which may be taken by the insured to 20 avoid such punitive effects. 21 S 8. Paragraphs 6 and 7 of subsection (b) of section 5201 of the 22 insurance law are amended and a new paragraph 8 is added to read as 23 follows: 24 (6) insured motor vehicles where the insurer disclaims liability or 25 denies coverage, [and] 26 (7) unregistered motor vehicles[.], AND 27 (8) AN ACCIDENT STAGED TO DEFRAUD AN INSURER. 28 S 9. This act shall take effect one year after it shall have become a 29 law.