Expands the application of provisions regulating insurance on wireless communications equipment

Summary of specific provisions

Section one amends section 2131 of the insurance law to better ensure that consumers receive all relevant wireless communications equipment insurance policy information, specifically by adding a new premium and compensation disclosure requirement to the section 2131 set of disclosures designed specifically for such policies.

Section two amends section 2131 of the insurance law to expand the definition of wireless communications equipment insurance policies to cover all entities offering coverage essentially identical to the products that are currently covered by section 2131.

Section three amends Insurance Law § 2131(1) to update the definition of wireless communications equipment to more broadly encompass constructs designed to circumvent the consumer protections provided in this chapter.

Section four makes a technical amendment to Insurance Law section 3449 to ensure proper cross referencing to Insurance Law section 2131.

Existing law

Insurance Law section 2131 requires numerous written and material disclosures by producers of limited licensed wireless communications equipment insurance coverage products. The section 2131 disclosures were carefully constructed to establish the sales of these products as arms length transactions and eliminate the possibility of improper steering by producer agents.

The section 2131 disclosures are numerous. They include the name of a producer and any agents, a disclosure that a product may be a duplication of a renter's, homeowner's, automobile or other liability insurance policy, as well as a clear delineation of covered losses, billing processes, and cancellation and refund rights.

The section 2131 disclosures also specifically ensure that consumers do not rely on limited lines sales agents for guidance on coverage as they might on sales agents of traditional insurance products, such as life, home, automobile and disability coverage. Specifically, section 2131 requires that consumers be notified that producer employees "are not qualified or authorized to evaluate the adequacy of the purchaser's existing coverages, unless otherwise licensed."

Justification

This bill will address the emerging problem of certain businesses circumventing important consumer protection through various

schemes that seek to exploit technicalities in the Insurance Law. In some states, businesses structured in an attempt to operate outside the scope of the insurance laws are reneging on their commitments to pay valid consumer claims or refunding unnecessary premium payments. This bill will clarify that those products that function essentially as wireless communications equipment insurance policies should be subject to the same disclosure requirements and be provided only by solvent authorized insurance companies.

This bill is also necessary to improve the disclosure of relevant information to consumers of limited lines wireless communications equipment insurance policies by specifying how the information should be provided and by providing more information, specifically with regard to producer compensation, that is relevant, understandable and properly emphasized in the context of what were originally designed to be simple, common, arms length transactions.

The bill is also necessary to update the definition of wireless communications equipment to ensure that consumers have access to insurance coverage for devices, such as laptops and tablets, that access communications services like wireless internet connections and not just cellular systems.

The bill is also necessary to make a technical amendment to provide for proper cross referencing by a certain provision of section 3449 of the Insurance Law to section 2131 of the same chapter.

Prior legislative history

This is a new bill.

Fiscal implications

None

Effective date

Immediately.