Recently Enacted Insurance Law Legislation (NYS)

Governor Hochul has signed into law two pieces of legislation commented on by the City Bar’s Insurance Law Committee. The first will require automobile insurance carriers to offer supplemental spousal liability coverage to married persons on an opt-out basis, and to unmarried persons on an opt-in basis. The Committee supported the bill because it sensibly restricts the opt-out regime to married insureds, while making it clear that unmarried persons will not be required to accept this unwanted and unnecessary coverage or pay for it simply because they fail to fill out a form. Their report argued that regardless of the merits of an opt-out regime, at a minimum it should not apply to persons who do not benefit from this coverage at all (e.g., unmarried persons). This new law will take effect on March 26, 2025.

The second bill will allow insurers to sell business interruption insurance that is not tied to physical damage, which businesses could purchase in the event of future pandemics or other events where there may not be physical damage to the property, such as an active shooter threat. The Committee supported adding business interruption insurance as a stand-alone kind of insurance. However, the Committee raised a concern with the bill’s definition of business interruption insurance that appears to be inconsistent with the Memorandum of Support and that could lead to confusion or unintended loss of coverage. Specifically, the bill defines business interruption insurance as insurance against certain kinds of loss “resulting from a business closure,” whereas the Memorandum in Support describes it as coverage for losses resulting from a “closure or a reduction in business.” The Committee believes that if the elimination of “a reduction” in business was unintentional, then the wording of the bill should be amended; and if it was intentional, it would be helpful to the insurance community and its customers to understand the reasoning behind this narrowing of the customary definition of business interruption insurance. Unfortunately the Committee’s recommendation was not adopted and the bill was enacted as-is. The new law will take effect later this month on the 27th.

Many thanks to the Insurance Law Committee for their work on these issues!