The New York State Senate

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

                                 1471--A
    Cal. No. 120

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            January 12, 2015
                               ___________

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 and second report,
  ordered to a third reading, passed by  Senate  and  delivered  to  the
  Assembly,  recalled,  vote  reconsidered,  restored  to third reading,
  amended and ordered reprinted, retaining its place  in  the  order  of
  third reading

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
THIRTY  DAYS,  RESCIND  OR RETROACTIVELY CANCEL TO THE INCEPTION A NEWLY
ISSUED AUTOMOBILE INSURANCE POLICY SUBJECT TO  SECTIONS  THREE  THOUSAND
FOUR  HUNDRED  TWENTY-FIVE  OR THREE THOUSAND FOUR HUNDRED TWENTY-SIX OF
THIS ARTICLE, IF THE INITIAL PREMIUM PAYMENT IS NOT HONORED BY A  FINAN-
CIAL  INSTITUTION  DUE  TO  THE NONEXISTENCE OF A BANK ACCOUNT.  FOR THE
PURPOSES OF THIS SECTION "NONEXISTENCE OF A  BANK  ACCOUNT"  SHALL  MEAN
THAT  NO  ACCOUNT  WITH THE NAME AND ACCOUNT NUMBER PROVIDED WAS EVER IN
EXISTENCE AND SHALL NOT INCLUDE ACCOUNTS THAT MAY BE CLOSED OR OTHERWISE
INACTIVE.  IN THE EVENT THAT SUCH INITIAL PAYMENT IS NOT  HONORED  BY  A
FINANCIAL  INSTITUTION  DUE  TO  THE NONEXISTENCE OF A BANK ACCOUNT, THE
INSURER SHALL NOTIFY THE POLICYHOLDER BY CERTIFIED AND FIRST CLASS  MAIL
THAT  UNLESS  THE  POLICYHOLDER REMITS PAYMENT TO THE INSURER WITHIN TEN
BUSINESS DAYS, THE POLICY MAY BE RESCINDED OR CANCELLED RETROACTIVELY TO
THE INCEPTION OF THE POLICY. HOWEVER, IF PAYMENT IS REMITTED  AFTER  THE
TENTH BUSINESS DAY AND THE INSURED HAS NOT BEEN NOTIFIED THAT THE POLICY
HAS  BEEN  RESCINDED  OR RETROACTIVELY CANCELED, THE RIGHT TO RESCIND OR

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

                                                           LBD00569-02-5

S. 1471--A                          2

RETROACTIVELY CANCEL SUCH POLICY  PURSUANT  TO  THIS  SECTION  SHALL  BE
DEEMED  TO HAVE BEEN WAIVED AND SUCH POLICY SHALL REMAIN IN EFFECT. 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
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 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, OR RESCIND COVER-
AGE PURSUANT TO SECTION THREE THOUSAND FOUR HUNDRED FIFTY-FIVE  OF  THIS
ARTICLE, for death or bodily injury arising out of a motor vehicle acci-
dent,  INCLUDING  ANY  CLAIM  FOR  PERSONAL  INJURIES UNDER AN UNINSURED
MOTORIST ENDORSEMENT BY ANY OCCUPANT OF A MOTOR VEHICLE OR OTHER  PERSON
INVOLVED  IN  AN  ACCIDENT WHICH 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

S. 1471--A                          3

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
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

S. 1471--A                          4

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
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

S. 1471--A                          5

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
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 one year after it shall have become a
law.