Assembly Bill A8562

                                BILL NUMBER:A8562            REVISED 4/6/10

TITLE  OF  BILL:    An  act  to amend the navigation law, in relation to
claims against insurers for petroleum spills

PURPOSE: Protects homeowners from the onerous costs related to the reme-
diation of petroleum leaks on residential property. Unless  the  insurer
prevails  on the affirmative defense, the standard homeowner's insurance
policy should cover the claim.

SUMMARY OF PROVISIONS: Section 1 amends section 190  of  the  Navigation
Law to add the following:

(a)  requires all homeowners' policies of insurance to cover the cleanup
and removal costs and all direct and  indirect  damages  relating  to  a
discharge of petroleum;

{b)  establishes  an affirmative defense against a claim for coverage of
the costs and damages relating  to  a  discharge  of  petroleum  if  the
insured  had  actual  knowledge of a condition which a reasonable person
would have understood to pose an imminent risk of a discharge of  petro-
leum and that the insured failed to take reasonable steps to prevent the
discharge;

(c)  requires  insurers  to  provide notice in every homeowner's policy.
newly issued or renewed which insures against damage  to  property  that
              

states  in  part  "You have a responsibility to prevent a discharge from
your petroleum tanks and associated pipelines": and

(d) establishes that nothing in this section shall be construed to limit
any pre-existing right in which the insured may  have  had  compensation
from  the insurer for cleanup and removal costs and all direct and indi-
rect damages relating to the discharge of petroleum.

Section 2 provides for an effective date of the first  of  January  next
succeeding the date on which it shall have become a law.

BACKGROUND AND JUSTIFICATION:  There are approximately 2.3 million resi-
dences  in  the  state that rely on home heating oil or kerosene to heat
their homes. Sometimes the tank or lines may leak, rupture or  otherwise
fail,  allowing  oil  to  enter  the soil and groundwater and/or surface
water. Remediation is often expensive and includes soil excavation, tank
removal and replacement,  drinking  water  filtration,  alternate  water
supplies  and  groundwater  treatment  and  monitoring.  Under  New.York
State's Oil Spill Act, the homeowner is strictly liable for the spill or
leak and the cleanup costs.

Petroleum leaks or spills are very serious threats to  the  environment,
but additionally they can bring financial ruin to homeowners.

Spills  that  occur  on  residential  properties  can cost anywhere from
several thousand dollars to hundreds of thousands of  dollars  to  clean

up.  Many  of these spills involve petroleum storage systems whose tanks
or lines have leaked, and as a result, the oil has seeped into the  soil
and  impacted  groundwater which typically is a source of drinking water
for  the surrounding community. Remediation may include soil excavation,
tank removal and replacement (if the tank was the source),  as  well  as
groundwater monitoring Or treatment. These cases are rare but are devas-
tating  to  the financial wellbeing of the homeowner as the homeowner is
strictly liable for the leak  or  spill,  and  the  subsequent  clean-up
costs.

Insurance  companies  have routinely included absolute "pollution exclu-
sions" in all homeowner policies and refused to cover these costs. These
cases, though they often constitute a severe financial burden  to  indi-
vidual  homeowners, are limited and should not impose a burden on insur-
ance companies.

This legislation requires these costs to be covered in  homeowner  poli-
cies.

LEGISLATIVE HISTORY: New Bill.

FISCAL IMPLICATIONS: None to the State.

EFFECTIVE DATE: This act shall take effect