Relates to anti-concurrent causation clauses

BILL NUMBER:S5581

Title of bill

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

Summary of provisions

This bill would prohibit an insurance company from denying a claim that would normally be covered under the policy solely because a separate risk occurred at the same time or contributed to the loss but was not covered under the policy or was specifically excluded.

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 companies 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 insurance coverage at a time when they needed it the most. This bill would rectify this by prohibiting insurance companies from denying claims under these circumstances.

Legislative history

New bill.

Fiscal implications

None.

Effective date

Immediately.