The New York State Senate

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

                                 4420--A

                       2017-2018 Regular Sessions

                            I N  S E N A T E

                            February 14, 2017
                               ___________

Introduced  by  Sens.  GOLDEN,  AKSHAR,  FUNKE -- read twice and ordered
  printed, and when printed to be committed to the Committee  on  Insur-
  ance  --  recommitted to the Committee on Insurance in accordance with
  Senate Rule 6, sec. 8 -- committee discharged, bill  amended,  ordered
  reprinted as amended and recommitted to said committee

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 3457
to read as follows:
  § 3457. 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
TO RECOVER UNDER THE MOTOR VEHICLE ACCIDENT INDEMNIFICATION CORPORATION,

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

                                                           LBD06803-02-8

S. 4420--A                          2

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.
  §  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-SEVEN 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.
  § 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-SEVEN  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
PERPETRATOR  OR  PERPETRATORS OF SUCH ACCIDENT, a motor vehicle operated
without permission of the owner, an  insured  motor  vehicle  where  the
insurer  disclaims liability or denies coverage or an unregistered vehi-
cle because of bodily  injury,  sickness  or  disease,  including  death
resulting therefrom, sustained by the insured, caused by accident occur-
ring  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

S. 4420--A                          3

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 dupli-
cate  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  obli-
gations  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  aforesaid  provisions  shall  be  construed  as  if   such
provisions were embodied therein.
  § 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-SEVEN 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
insured shall disclose, within forty-five days of the request, the bodi-

S. 4420--A                          4

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.
  §  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.
  §  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-SEVEN OF THIS  CHAPTER,  within  the  United  States,  its
territories 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.
  § 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-SEVEN 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
shall  be  sent  by regular mail with a certificate of mailing, properly

S. 4420--A                          5

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.
  § 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.
  §  9.  This  act  shall  take effect on the two hundred seventieth day
after it shall have become a law.