Requires the superintendent to promulgate regulations which provide standardized definitions for commonly used terms and phrases in certain insurance policies

BILL NUMBER:S5579

Title of bill

An act to amend the insurance law, in relation to requiring the superintendent of financial services to promulgate regulations which provide standardized definitions for commonly used terms and phrases in certain insurance policies

Summary of provisions

This bill would require the Superintendent of Financial Services, within six months of the effective date of this bill, to promulgate regulations which provide standardized definitions for commonly used terms and phrases found in homeowners policies and commercial lines policies that provide coverage for loss or damage to real property, personal property, or other liabilities for loss or damage to property. Insurers would be required to use the standardized terms and phrases in policies issued or delivered on or after the date,the regulations are finalized, which would be no later than January 1, 2015. The bill would also allow insurers to use alternative definitions at the discretion of the Superintendent, so long as such definitions are not any less favorable to the policyholder or claimant than those required under the regulations.

Justification

Homeowners and commercial insurance policies provide necessary coverage to individuals and business owners that can prove vital in the aftermath of a disaster such as Superstorm Sandy. However, these policies can also be complex, and commonly used terms and phrases may have different meanings when used in different policies. This can cause confusion amongst policyholders, especially following a disaster when they need their insurance coverage the most. This bill would address this by ensuring that all homeowners policies and certain commercial policies contain standardized terms and phrases.

Legislative history

New bill.

Fiscal implications

To be determined.

Effective date

Immediately.