The New York State Senate

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

                                 1959--A
    Cal. No. 52

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
  printed to be committed to the  Committee  on  Insurance  --  reported
  favorably  from  said  committee,  ordered to first report, amended on
  first report, ordered to a second  report,  and  to  be  reprinted  as
  amended, retaining its place in the order of second report

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 3455
to read as follows:
  S 3455. 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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD04362-02-3

S. 1959--A                          2

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.
THE MOTOR VEHICLE ACCIDENT INDEMNIFICATION CORPORATION MAY NOT SUBROGATE
ITS CLAIM AGAINST THE RESCINDING OR CANCELLING INSURER.
  S  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 FIFTY-FIVE 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.
  S 3. Paragraph 1 of subsection (f) of section 3420  of  the  insurance
law,  as  amended by chapter 305 of the laws of 1995, 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 by the
insured shall be issued or delivered by any authorized insurer upon  any
motor vehicle then principally 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 direc-
tors  of  the  Motor  Vehicle  Accident  Indemnification Corporation and
approved by the superintendent, all sums, not exceeding a maximum amount
or limit of twenty-five  thousand  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 entitled 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  regis-
tered  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 FIFTY-FIVE OF THIS ARTICLE, a stolen
vehicle,  A  MOTOR  VEHICLE  INVOLVED IN AN ACCIDENT WHICH WAS STAGED TO
DEFRAUD AN INSURER, EXCEPT SUCH VEHICLE OWNED AND OPERATED BY THE PERPE-
TRATOR OR PERPETRATORS OF SUCH ACCIDENT, a motor vehicle operated  with-
out  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 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

S. 1959--A                          3

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  article  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  afore-
said  provisions  shall be construed as if such provisions were embodied
therein.
  S 4. Subparagraph (A) of paragraph 2 of subsection (f) of section 3420
of the insurance law, as separately amended by chapters 547 and  568  of
the laws of 1997, 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.  Provided
however,  an  insurer  issuing  such  policy, 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 policy, 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 supple-
mentary   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 FIFTY-FIVE  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

S. 1959--A                          4

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.
  S 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.
  S 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 FIFTY-FIVE OF THIS CHAPTER, within the United States, its terri-
tories  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.
  S  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
FIFTY-FIVE  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
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

S. 1959--A                          5

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.
  S 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.
  S  9.  This  act  shall  take effect two hundred seventy days after it
shall have become a law.