S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3648
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 3, 2023
                                ___________
 
 Introduced  by M. of A. PRETLOW -- read once and referred to the Commit-
   tee 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:
 
   Section 1. The insurance law is amended by adding a new section 3426-a
 to read as follows:
   § 3426-A. CANCELLATION OF POLICY. (A) AN INSURER MAY, WITHIN THE FIRST
 SIXTY DAYS, RESCIND OR RETROACTIVELY CANCEL TO  THE  INCEPTION  A  NEWLY
 ISSUED   AUTOMOBILE   INSURANCE  POLICY  SUBJECT  TO  PARAGRAPH  ONE  OF
 SUBSECTION (A) OF SECTION THREE THOUSAND  FOUR  HUNDRED  TWENTY-FIVE  OF
 THIS  ARTICLE,  A  NEWLY  ISSUED  COMMERCIAL AUTOMOBILE INSURANCE POLICY
 SUBJECT TO SECTION THREE THOUSAND FOUR HUNDRED TWENTY-SIX OF THIS  ARTI-
 CLE,  OR  A POLICY ISSUED PURSUANT TO ANY PLAN ESTABLISHED UNDER ARTICLE
 FIFTY-THREE OF THIS CHAPTER, IF  THE  INITIAL  PREMIUM  PAYMENT  IS  NOT
 HONORED  BY A FINANCIAL INSTITUTION DUE TO THE NONEXISTENCE OR THE UNAU-
 THORIZED USE OF A BANK ACCOUNT, OR THE INITIAL PREMIUM PAYMENT IS DENIED
 BY A CREDIT CARD COMPANY DUE TO THE UNAUTHORIZED USE OF  A  CREDIT  CARD
 ACCOUNT. 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.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05340-01-3
 A. 3648                             2
              

 
 THE MOTOR VEHICLE ACCIDENT INDEMNIFICATION CORPORATION MAY NOT SUBROGATE
 ITS CLAIM AGAINST THE RESCINDING OR CANCELLING INSURER.
   §  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 INCLUDING A DISCLAIMER
 OR DENIAL BECAUSE THE INSURER RESCINDED OR CANCELLED  COVERAGE  PURSUANT
 TO SECTION THREE THOUSAND FOUR HUNDRED TWENTY-SIX-A OF THIS ARTICLE, for
 death  or bodily injury arising out of a motor vehicle accident, INCLUD-
 ING ANY CLAIM FOR PERSONAL INJURIES UNDER AN UNINSURED MOTORIST ENDORSE-
 MENT BY ANY OCCUPANT OF A MOTOR VEHICLE OR OTHER PERSON INVOLVED  IN  AN
 ACCIDENT  THAT 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.
   §  3.  Paragraph  1 of subsection (f) of section 3420 of the insurance
 law, as amended by section 19 of part III of chapter 59 of the  laws  of
 2019, 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  or  an
 altered  motor  vehicle  commonly  referred  to as a "stretch limousine"
 having a seating capacity of eight or more passengers used in the  busi-
 ness  of  carrying  or  transporting passengers for hire, by the insured
 shall be issued or delivered by any authorized insurer  upon  any  motor
 vehicle  or  an altered motor vehicle commonly referred to as a "stretch
 limousine" having a seating capacity of eight or more passengers used in
 the business of carrying or transporting passengers for hire, then prin-
 cipally 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 directors of the Motor Vehicle
 Accident Indemnification Corporation and approved by the superintendent,
 all sums, not exceeding a maximum amount or limit of  twenty-five  thou-
 sand  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 enti-
 tled 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 registered 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 SECTION THREE THOUSAND FOUR HUNDRED
 TWENTY-SIX-A OF THIS ARTICLE, a stolen vehicle, A MOTOR VEHICLE INVOLVED
 IN AN ACCIDENT WHICH WAS STAGED TO DEFRAUD AN INSURER, EXCEPT SUCH VEHI-
 CLE OWNED AND OPERATED BY THE PERPETRATOR OR PERPETRATORS OF SUCH  ACCI-
 DENT,  a  motor  vehicle  operated  without  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
 A. 3648                             3
 
 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 arti-
 cle  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 aforesaid provisions
 shall be construed as if such provisions were embodied therein.
   § 4. Subparagraph (A) of paragraph 2 of subsection (f) of section 3420
 of the insurance law, as amended by section 19 of part III of chapter 59
 of the laws of 2019, 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;  and  any
 such  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 an altered motor vehicle
 commonly referred to as a "stretch limousine" having a seating  capacity
 of  eight  or more passengers used in the business of carrying or trans-
 porting   passengers   for    hire,    shall    provide    supplementary
 uninsured/underinsured  motorists  insurance  for  bodily  injury, in an
 amount of a combined single limit of one million five  hundred  thousand
 dollars  because of bodily injury or death of one or more persons in any
 one accident. Provided however, an  insurer  issuing  any  such  policy,
 except  a  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 an altered  motor  vehicle
 commonly  referred to as a "stretch limousine" having a seating capacity
 of eight or more passengers used in the business of carrying  or  trans-
 porting  passengers  for  hire,  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 poli-
 cy, 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 supplementary
 A. 3648                             4
 
 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 TWENTY-SIX-A OF THIS  ARTICLE,  A
 MOTOR  VEHICLE  INVOLVED  IN  AN ACCIDENT WHICH WAS STAGED TO DEFRAUD AN
 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.
   §  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.
   §  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 TWENTY-SIX-A OF THIS CHAPTER,  within  the  United  States,  its
 territories 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.
   § 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
 TWENTY-SIX-A 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
 A. 3648                             5
 
 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
 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.
   §  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.
   § 9. This act shall take effect on  the  two  hundred  seventieth  day
 after it shall have become a law.