BILL NUMBER: S6205

SPONSOR: SKOUFIS
 
TITLE OF BILL:

An act to amend the insurance law, in relation to anti-concurrent causa-
tion clauses

 
PURPOSE OR GENERAL IDEA OF BILL:

To prohibit the anti-concurrent clause in homeowner's insurance poli-
cies.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1: Amends the insurance law by adding section 3463 wherein it
would prohibit an insurance company from denying a claim that would
normally be covered because a flood that is not covered or is specif-
ically excluded under the policy occurred at the same time or contrib-
uted to the loss. It also clarifies that an insurer is not obligated to
pay for any loss caused by the flood that is not covered or is excluded
under the policy.
              

In addition, this bill would also state that, if an insurer issues a
policy that includes a provision that allows the insurer to determine
whether a loss caused by a covered peril may or may not be covered
because a peril that is excluded or is not covered under the policy was
a cause of the loss, the insurer must clearly state in the policy which
perils not covered or excluded would have to cause the loss and whether
the causation would have to be proximate or remote. This provision would
also have to be disclosed to the policyholder prior to the sale of the
Policy.

Section 2: Sets the effective date.

 
JUSTIFICATION:

An anti-concurrent causation clause is a provision contained in many
homeowners policies that states that if a loss is caused by two or more
perils, one that is covered by the policy and one. that is excluded,
then the loss is excluded, regardless of which peril is the primary
cause or whether the perils occurred concurrently or in a sequence. For
example, if a policy covers wind damage but not flood damage, and both
events happen at about the same time, then the damage to the property
will not be covered. When insurers that use anti-concurrent causation
clauses treat property damage as a single loss triggered by multiple
perils the result is a complete denial of the claim. In the aftermath of
Superstorm Sandy, many homeowners were surprised when insurance compa-
nies denied their claims for perils that should have been covered under
the policy (such as windstorm damage) because the perils occurred at the
same time as a flood, which is excluded under most homeowners policies.
As a result, these homeowners found themselves without adequate insur-
ance coverage at a time when they needed it the most. This bill would
rectify this by limiting the circumstances in which insurers can use
anti-con- current causation clauses and requiring clear disclosure of
such clauses prior to the sale of a policy.

 
PRIOR LEGISLATIVE HISTORY:

Senate

2023: S7048, Referred to insurance

2024: S7048, Referred to insurance

Assembly

2023: N/A

2024: N/A

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to all policies
issued or renewed after such effective date.