senate Bill S2032

2013-2014 Legislative Session

Makes provisions with respect to notices of homeowners deductibles triggers for hurricane windstorms

download bill text pdf

Sponsored By

Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

do you support this bill?

Actions

view actions (2)
Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to insurance
Jan 09, 2013 referred to insurance

Co-Sponsors

view additional co-sponsors

S2032 - Bill Details

See Assembly Version of this Bill:
A2729
Current Committee:
Law Section:
Insurance Law
Laws Affected:
Ren §3445 to be §3455, amd §3455, Ins L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S3387A, A3283A
2009-2010: A4847A

S2032 - Bill Texts

view summary

Provides superintendent of insurance shall establish standards for hurricane windstorm deductibles, creating uniformity in the operation of such deductibles with respect to the triggering event.

view sponsor memo
BILL NUMBER:S2032

TITLE OF BILL: An act to amend the insurance law, in relation to
homeowners insurance deductibles triggers

PURPOSE: To help promote better understanding of the applicability
and amount of hurricane windstorm deductibles in homeowners and
dwelling fire policies. To establish reasonable standards for the
operation of hurricane windstorm deductibles.

SUMMARY OF PROVISIONS: This legislation amends section 3445 of the
insurance law to require insurers that issue homeowners' and dwelling
fire policies with catastrophic windstorm deductibles to provide
notice to their policyholders, upon policy issuance and renewal, which
clearly explains the amount and the applicability of the deductible,
and to send separate notice prior to hurricane season, in accordance
with standards established by the superintendent in regulation. The
bill would require the superintendent to establish reasonable
standards for uniformity in the triggering and operation of hurricane
windstorm deductibles to promote clear understanding and a reasonable
and actuarially appropriate apportionment of hurricane risk between
insurers and policy holders.

EXISTING LAW:

Section 3453 of the insurance law requires the superintendent to
establish disclosure requirements in regulation with respect to the
operation of windstorm deductibles in homeowners' and dwelling fire
policies. The regulation sets standards for such notice on the
declarations page and in a separate notice accompanying all new and
renewed policies.

JUSTIFICATION: Legislation is required to ensure that insurance
consumers fully understand the terms of the catastrophic windstorm
deductible in their homeowners and dwelling fire policies. In
particular, consumers need to understand the increased exposure they
are assuming.

Currently, insurers are utilizing a wide variety of windstorm
deductible programs in their homeowners and swelling fire policies.
Windstorm deductibles, which can range from 1% to 7.5% , are usually
expressed as a percentage of the homeowners' Coverage A limit (the
value of dwelling structure). A 6% deductible on a 5500,000 would
result in the policyholder having to pay the first $30,000 of damages
sustained to the home during a windstorm.

While windstorm deductibles are expressed as a percentage, most policy
holders are used to relatively low deductibles expressed as a dollar
amount (i.e., 5250, 5500, $1,000). Percentage deductibles are
generally found in health insurance programs, where policy holders are
required to pay a percentage of a medical claim. Therefore, policy
holders can easily misconstrue a 6% windstorm deductible as requiring
them to pay only 6% of the damages sustained, rather than up to 6% of
the value of their home. Additionally, while the deductible is often
described in terms of a percentage of the Coverage A limit, it
typically applies not only to the losses to the dwelling structure,


but also to additional structures on the premises (Coverage B) and to
the contents of the home (Coverage C).

Requiring insurers to issue a notice to policyholders which explains
in plain language the amount and circumstances in which the deductible
applies will help policyholders better understand these various and
complicated deductible provisions. Also, consumer confusion regarding
the amount and applicability of their percentage deductibles will be
further reduced by requiring the deductible to be expressed, on the
policy and declarations page, as a dollar amount of each coverage part
to which it applies.

Another area of confusion for consumers is understanding the event
which activates or "triggers" the applicability of their windstorm
deductible. Currently, insurers' deductible programs contain a variety
of 'triggering' events. Since the triggering event will determine
whether a windstorm deductible applies to a policy holders loss, it is
crucial that it be fair and reasonable to both the policyholder and
the insurer.

Uniform standards for and notice explaining the operation of
catastrophic windstorm deductibles are necessary to promote easier
comparison between different insurers' options, and to ensure clear
understanding of the extent of policyholder exposure under these
options. The requirements for understandable and fair standards will
ensure that catastrophic windstorm deductibles are reasonable,
actuarially appropriate and applied in the proper circumstances.

LEGISLATIVE HISTORY: 2011-12 S.3387A; 2008 S.6042

FISCAL IMPLICATIONS: None to the State.

EFFECTIVE DATE: This act shall take effect on the ninetieth day after
it shall have become a law, and shall apply to all policies issued or
renewed on or after the one hundred eightieth day after the adoption
of the regulations required in section 3455 of the insurance law, as
amended by this act.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2032

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced by Sens. LAVALLE, MARTINS, MAZIARZ, RANZENHOFER -- 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 homeowners insurance
  deductibles triggers

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

  Section  1.  Section 3445 of the insurance law, as added by chapter 44
of the laws of 1998, is renumbered section 3455 and amended to  read  as
follows:
  S 3455. Windstorm insurance notice; DEDUCTIBLE TRIGGER STANDARDS.  (A)
The superintendent shall by regulation establish disclosure requirements
with  respect to the operation of any deductible in a homeowner's insur-
ance policy or dwelling fire personal lines policy which applies as  the
result  of  a  windstorm. Such regulations shall prescribe the form of a
notice to be provided by an insurer to  an  insured.  The  notice  shall
explain  in  clear  and plain language the amount of the deductible, the
circumstances under which the deductible applies and any  other  matters
which the superintendent, in his or her discretion, shall deem necessary
or appropriate.
  (B)  THE  SUPERINTENDENT  SHALL  BY REGULATION ESTABLISH STANDARDS FOR
HURRICANE WINDSTORM DEDUCTIBLES, WHICH CREATE, TO  THE  GREATEST  EXTENT
POSSIBLE,  UNIFORMITY  IN THE OPERATION OF SUCH DEDUCTIBLES WITH RESPECT
TO THE TRIGGERING EVENT.
  THE SUPERINTENDENT SHALL  PROMULGATE  SUCH  REGULATIONS  BY  EMERGENCY
ADOPTION  OR  OTHERWISE, WITHIN ONE HUNDRED EIGHTY DAYS OF THE EFFECTIVE
DATE OF THE CHAPTER OF THE LAWS OF TWO  THOUSAND  THIRTEEN  WHICH  ADDED
THIS  SUBSECTION.  NOTWITHSTANDING  PARAGRAPH SEVEN OF SUBSECTION (A) OF
SECTION THREE THOUSAND FOUR HUNDRED TWENTY-FIVE  OF  THIS  ARTICLE,  ANY
CHANGES IN A HOMEOWNER'S INSURANCE POLICY OR DWELLING, FIRE, OR PERSONAL

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06134-01-3

S. 2032                             2

POLICY  REGISTERED  AS A RESULT OF THE ADOPTION BY THE SUPERINTENDENT OF
REGULATIONS UNDER THIS SECTION, MAY BE APPLIED TO SUCH POLICIES  ON  THE
POLICY'S  INITIAL RENEWAL DATE OR THE POLICY'S NEXT ANNUAL RENEWAL AFTER
THE EFFECTIVE DATE OF SUCH REGULATIONS.
  S  2.  This  act shall take effect on the ninetieth day after it shall
have become a law, and shall apply to all policies issued or renewed  on
or  after  the one hundred eightieth day after the adoption of the regu-
lations required in section 3455 of the insurance  law,  as  amended  by
this act.

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.