Relates to deductibles for physical damage insurance.
TITLE OF BILL: An act to amend the insurance law, in relation to deductibles for physical damage insurance
PURPOSE: The purpose of this legislation is to permit automobile insurance companies to reduce or zero out automobile physical damage deductibles.
SUMMARY OF PROVISIONS: Amends insurance law section 3411(k) to allow auto insurance companies to offer a reduced or zero deductibles for automobile physical damage.
EXISTING LAW: Current insurance law requires auto insurers to offer physical damage insurance with a standard deductible of $200 for each occurrence. The insured also currently has the option to purchase a policy with slightly lower deductibles upon inception of the policy, at the annual anniversary date, or upon replacement/addition of a vehicle as follows: $50 for fire/theft/comprehensive, $100 for assigned risk policies, and $100 for collision. Current insurance law also requires insurers to offer physical damage insurance with higher deductibles ($250, $500, $1000 and any other amount the superintendent may prescribe). Insurers are not currently permitted to offer a reduced deductible, a zero deductible, or a deductible that diminishes over time.
JUSTIFICATION: This legislation would permit automobile insurance companies to offer policies where there would be no out-of-pocket payments for automobile damages. Currently the law mandates a minimum deductible be paid by the customer. Automobile insurance offerings have progressed since the enactment of this provision fueled by innovative products and consumer demand.
In other states, consumers have access to different policies which suit their needs. This legislation would provide flexible options to automobile insurance companies. For example, one insurance company may wish to provide reduced or zero deductibles based on the length of time the consumer is with the insurance company, another may wish to offer no deductible on property damage as part as an increased premium. This legislation would accommodate these options. Of course, such options are subject to the oversight of the Department of Financial Services.
Policies without the requirement of deductibles or the payment out-of-pocket expenses are widely accepted throughout the nation,
but are currently denied New Yorkers. This bill would allow for the offering of these products to New York residents so they can decide what level of coverage best suits their needs.
LEGISLATIVE HISTORY: New bill.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 6981 IN SENATE April 19, 2012 ___________Introduced by Sen. SEWARD -- 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 deductibles for phys- ical damage insurance THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subsection (k) of section 3411 of the insurance law is amended to read as follows: (k) (1) Each insurer which offers physical damage insurance subject to the provisions of this section shall offer such insurance with a stand- ard deductible of two hundred dollars for each occurrence. The insured shall, however, at the inception of the policy or at the annual anniver- sary date, or at the time of the replacement or addition of an automo- bile, have the option of purchasing a policy with a lesser deductible, but in no event may the insurer sell a policy with a deductible of less than fifty dollars for fire, theft or comprehensive insurance coverages (one hundred dollars for assigned risk policies issued pursuant to para- graph two of subsection (a) of section five thousand three hundred three of this chapter) and one hundred dollars for collision insurance cover- age except that window glass coverage may be sold without a deductible. Each insurer which offers physical damage insurance subject to the provisions of this section shall also offer physical damage coverages with co-insurance or deductible provisions or combinations thereof as the superintendent may prescribe, including but not limited to deduct- ibles of two hundred fifty dollars, five hundred dollars and one thou- sand dollars. (2) NOTWITHSTANDING THE DOLLAR LIMITS FOR DEDUCTIBLES IN PARAGRAPH ONE OF THIS SUBSECTION, AN INSURER WHICH OFFERS PHYSICAL DAMAGE INSURANCE SUBJECT TO THE PROVISIONS OF THIS SECTION MAY OFFER A REDUCED DOLLAR DEDUCTIBLE, A ZERO DOLLAR DEDUCTIBLE OR A DEDUCTIBLE THAT DIMINISHES OVER TIME AND MAY ULTIMATELY BE REDUCED TO ZERO DOLLARS. S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD15192-01-2