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BUSINESS DAYS, THE POLICY MAY BE RESCINDED OR CANCELLED RETROACTIVELY TO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HAS BEEN RESCINDED OR RETROACTIVELY CANCELED, THE RIGHT TO RESCIND OR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