Senate Bill S7048

                                 
BILL NUMBER: S7048

SPONSOR: BRESLIN
 
TITLE OF BILL:

An act to amend the insurance law, in relation to anti-concurrent causa-
tion clauses

 
PURPOSE OR GENERAL IDEA OF BILL:

To prohibit the anti-concurrent clause in homeowner's insurance policies

 
SUMMARY OF SPECIFIC PROVISIONS:

This bill would prohibit an insurance company from denying a claim that
would normally be covered because a flood that is not covered or is
specifically excluded under the policy occurred at the same time or
contributed to the loss. The bill also clarifies that an insurer is not
obligated to pay for any loss caused by the flood that is not covered or
is excluded under the policy.

In addition, this bill would also state that, if an insurer issues a
              

policy that includes a provision that allows the insurer to determine
whether a loss caused by a covered peril may or may not be covered
because a peril that is excluded or is not covered under the policy was
a cause of the loss, the insurer must clearly state in the policy which
perils not covered or excluded would have to cause the loss and whether
the causation would have to be proximate or remote. This provision would
also have to be disclosed to the policyholder prior to the sale of the
policy.

 
JUSTIFICATION:

An anti-concurrent causation clause is a provision contained in many
homeowners policies that states that if a loss is caused by two or more
perils, one that is covered by the policy and one. that is excluded,
then the loss is excluded, regardless of which peril is the primary
cause or whether the perils occurred concurrently or in a sequence. For
example, if a policy covers wind damage but not flood damage, and both
events happen at about the same time, then the damage to the property
will not be covered. When insurers that use anti-concurrent causation
clauses treat property damage as a single loss triggered by multiple
perils the result is a complete denial of the claim. In the aftermath of
Superstorm Sandy, many homeowners were surprised when insurance compa-
nies denied their claims for perils that should have been covered under
the policy (such as windstorm damage) because the perils occurred at the
same time as a flood, which is excluded under most homeowners policies.
As a result, these homeowners found themselves without adequate insur-
ance coverage at a time when they needed it the most. This bill would
rectify this by limiting the circumstances in which insurers can use
anti-con- current causation clauses and requiring clear disclosure of
such clauses prior to the sale of a policy.

 
PRIOR LEGISLATIVE HISTORY:

New bill this session

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
Immediately