S2315-2013 Actions

• Jan 15, 2013: REFERRED TO INSURANCE

S2315-2013 Memo

BILL NUMBER:S2315

TITLE OF BILL:  An act to amend the insurance law, in relation to the
timing for giving notice of a loss under insurance contracts

PURPOSE:  The purpose of this bill is to mitigate against the
potential for procedural of insurance coverage resulting in
unreasonable loss of insurance coverage for insured's

SUMMARY OF PROVISIONS:

Section 3407(c) of the insurance law is added as a new subdivision
which provides that an insurer shall not decline coverage for a claim
based on the failure of an insured to give timely notice of claim
unless the insurer can demonstrate that it has suffered substantial
prejudice as a result of the delayed notice.

JUSTIFICATION:  Insurance companies registered to operate in New York
State have taken advantage of contract provisions which provide that
late notice of loss by an insured will result in the declination of
coverage. This declination of coverage which results from the filing
of an untimely notice of loss is a draconian measure which allows
insurance carriers to avoid providing coverage for their insured's
losses, even when such untimely notice of loss has failed to cause any
prejudice to the insurance carrier.

LEGISLATIVE HISTORY:

S.4669 (2009-2010); S.4714/A.9281 (2011-2012)

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect immediately.

S2315-2013 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    2315

                         2013-2014 Regular Sessions

                              I N  SENATE

                              January 15, 2013
                                 ___________

  Introduced  by  Sen.  DeFRANCISCO -- read twice and ordered printed, and
    when printed to be committed to the Committee on Insurance

  AN ACT to amend the insurance law, in relation to the timing for  giving
    notice of a loss under insurance contracts

    THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section 1. Section 3407 of the insurance law is amended  by  adding  a
  new subsection (c) to read as follows:

    (C)  (1)  ANY  PROVISION  CONTAINED IN AN INSURANCE CONTRACT ISSUED OR
  DELIVERED IN THIS STATE OR COVERING A PROPERTY IN  THIS  STATE  THAT  IS
  CONTRARY  IN  PURPOSE  WITH,  OR IN CONFLICT WITH THE PROVISIONS OF THIS
  SECTION SHALL BE NULL AND VOID IF THE  EFFECTUATION  OF  SUCH  PROVISION
  WOULD  RESULT IN THE DEROGATION OF THE BENEFIT TO AN INSURED INTENDED BY
  THE ENACTMENT OF THIS SECTION.
    (2) AN INSURER SHALL NOT DENY COVERAGE FOR A CLAIM BASED ON THE  FAIL-
  URE OF AN INSURED TO GIVE TIMELY NOTICE OF A CLAIM UNLESS THE AUTHORIZED
  INSURER  OR  OTHER INSURER CAN DEMONSTRATE THAT IT HAS SUFFERED SUBSTAN-
  TIAL PREJUDICE AS A RESULT OF THE  DELAYED  NOTICE.  EVIDENCE  THAT  THE
  INSURER HAD KNOWLEDGE OF THE LOSS THAT IS THE SUBJECT OF THE CLAIM SHALL
  CREATE A REBUTTABLE PRESUMPTION THAT THE INSURER HAS NOT BEEN PREJUDICED
  BY  DELAYED NOTICE. NOTICE GIVEN TO ANY LICENSED AGENT OF THE INSURER IN
  THIS STATE WITH PARTICULARS SUFFICIENT TO IDENTIFY THE INSURED SHALL  BE
  DEEMED NOTICE TO THE INSURER.
    (3)  THE  PROVISIONS  OF  THIS SECTION SHALL BE LIBERALLY CONSTRUED IN
  ORDER TO EFFECTUATE THE PURPOSE HEREOF WHICH IS TO MITIGATE AGAINST  THE
  POTENTIAL  FOR  PROCEDURAL  DENIAL  OF  INSURANCE  COVERAGE RESULTING IN
  UNREASONABLE LOSS OF INSURANCE PROTECTION FOR INSUREDS.
    S 2. Severability clause. If any clause, sentence, paragraph, subdivi-
  sion, section or part of this act shall be  adjudged  by  any  court  of
  competent  jurisdiction  to  be invalid, such judgment shall not affect,
  impair or invalidate the remainder thereof, but shall be confined in its

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD03104-01-3

 S. 2315                             2

  operation to the clause, sentence, paragraph,  subdivision,  section  or
  part thereof directly involved in the controversy in which such judgment
  shall  have been rendered. It is hereby declared to be the intent of the
  legislature  that  this act would have been enacted even if such invalid
  provisions had not been included herein.
    S 3. This act shall take effect immediately, and shall  apply  to  all
  insurance  contracts,  executed, issued, reissued or renewed on or after
  such date.